Macro Theme:

Key dates ahead:

Founder’s Note:

Futures are up 40bps, with CL -2% to $84 (its lowest since 4/17).

Today is the SPACEX IPO, which is slated to launch at 9:30AM EST. The price was set at $135, with the early indications suggesting an open near $175.

Traders clearly believe in the Iran deal, as oil is at its lowest since mid-April. We also saw a sharp drop in SPX fixed strike vol (see PM note), with longer dated call buying coming in after Trump’s announcement. That Iran deal clearly, for the moment, brought relief to markets. SPX fixed strike vols are flat to mildly higher vs last night, ahead of the IPO.

Resistance for today shows at 7,500, with 7,525-7,575 being a solid “max high” into next week as positive gamma builds up in that range. Conversely first support is 7,400, then things soften up into 7,325 support.

The big question for today is: What, if anything, has to be sold to free-up buying power for this ~$1.75 tn behemoth? We speculate that some of the massive negative single stock deltas seen on Tuesday & Wednesday could have been related to traders selling other positions to get in line for SPCX. Given this, we would not be surprised to see some equity weakness around the IPO, but we would imagine that dip would be bought to due positive SPX gamma.

Our concern is that SPCX creates a short term liquidity vacuum, with most other stocks getting sold to buy SPCX. This is just a conspiracy theory at this moment, but its based off of the downright odd behavior of the market on May 14th, wherein we saw giant unusual 0DTE SPX calls come in to drive stocks higher. The indexes peaked right at the IPO release. We don’t know if this was an actual “pump and dump”, but when consider that CBRS raised $5.5bn on 5/14 it was the biggest IPO since 2020. SPACEX is hoping to raise $75 billion, which could magnify odd behaviors.

Adding to the intrigue, we believe the Russel and Nasdaq index community are buyers of this stock after 5 days from IPO. Also options start trading on 6/16 – right into the big FOMC and massive June OPEX. This signals to us “a few days of euphoria until the Street steps in”. TBD.

Zooming out a bit, we are watching next week as a large possible turning point for markets. Obviously if an Iran deal gets actually signed, that adds a lot of change into Wed FOMC. In a perfect world we’d see the SPX bid strongly into OPEX, which could set up a possible short term downside/correction play. Conversely if we get downside into next week, we highlight the JPM call near 7k, which expires on 6/30 as a time & price low.

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