Investment analysis by Ruslan Averin — originally published at averin.com.
Everyone wants to own a piece of SpaceX. That is exactly why chasing SPCX at 190, one week after it IPO'd at 135, is the worst version of the trade. There is a better one, and the inflated options premium pays you to take it: the cash-secured put. It is the strategy for the investor who genuinely wants the shares but refuses to overpay — and it is one of the safest ways to put the fat new-listing IV to work.
The idea in one sentence
I sell a put at a price I would be happy to buy SPCX at, I set aside the full cash to honor that purchase, and I collect a large premium for the promise. Two things can happen, and I am content with both.
The mechanics
With SPCX trading near 190, suppose I would be a willing buyer at 170 — a level that sits above the IPO price and gives me a real margin below the current quote. I sell one 170 put, about 30 to 45 days out, and because IV on this chain is enormous, that put might pay me 7.50 (750 dollars).
I do not sell it on margin. I "secure" it with cash: I set aside 17,000 dollars (170 strike x 100 shares), the exact amount I would owe if assigned. That is what makes it cash-secured and what makes it safe — there is no leverage, no margin call, no surprise.
Now the two outcomes:
Outcome A — SPCX stays above 170 at expiration. The put expires worthless. I keep the entire 750 dollars and my 17,000 dollars was never touched. On the cash committed for roughly a month, that is a meaningful yield, and I simply do it again. I got paid to wait.
Outcome B — SPCX falls below 170 and I am assigned. I buy 100 shares at 170 — a price I already decided was attractive. But my real cost basis is 170 minus the 7.50 premium = 162.50. I now own SpaceX at 162.50, roughly 14% below where it trades today and only about 20% above the IPO price, in a name I wanted anyway.
There is no bad branch here. I either earn a rich yield for my patience or I buy a company I want at a self-chosen discount. That is the definition of a margin of safety.
Why this beats chasing the stock
If I market-buy SPCX at 190 today, I have one way to win — it goes up — and I paid full retail into a euphoric, illiquid tape. With the cash-secured put I win if it goes up, sideways, or modestly down. The only scenario where the buyer beats me is a sharp rip higher where I "only" keep my premium instead of riding the shares. On a stock this overheated, I will happily trade some upside tail for a 14% cushion and guaranteed income. Selling overpriced fear beats buying overpriced hope.
The honest risks — and how I respect them
This strategy is safe, not riskless. Two things to be clear-eyed about:
Real downside below your strike. If SPCX cratered to 120 on bad news, I am still obligated to buy at 170. My 162.50 basis softens it, but I would be underwater. The defense is strike selection and conviction: I only sell cash-secured puts at strikes where I would genuinely be glad to own the business, and only on a company I actually want. If you would not want the shares at the strike, do not sell the put.
Assignment is the feature, not the bug. Some traders panic when a put goes in the money. With a cash-secured put, assignment is a planned outcome — I have the cash, I wanted the shares, I bought them cheaper than today. The only thing I avoid is being short the put through the November earnings report, where a violent gap could assign me far below my strike. I keep these expirations in front of that catalyst.
Execution notes
- Wide markets: like the rest of this new chain, the 170 put has a wide bid-ask. I sell with a limit order near the mid and let it work, never hitting the bid.
- Roll, do not panic: if SPCX drifts toward my strike before expiration and I am not ready to be assigned, I can roll the put down and out — buy back the 170, sell a lower strike further in time, often for a net credit. That collects more premium and lowers my potential basis further.
- Size to the cash, not the premium: I only sell as many puts as I can fully cash-secure and would be comfortable being assigned on all at once. The big premium is not a reason to sell more contracts than I can buy.
Where this fits
The cash-secured put is the front half of the wheel — sell puts until assigned, then sell calls against the shares. It pairs naturally with the covered call once you own the stock, and it sits one notch higher on the risk ladder than the fully defined-risk bull put spread, because your downside is the strike rather than a capped spread. For an investor who wants SpaceX, that trade-off is usually worth it.
Bottom line
Do not chase a one-week-old IPO at full price. Sell the inflated premium, name the price you would love to pay, and get paid either way. The fat IV is the market handing patient buyers a gift — take it.
This is not advice and not a recommendation. It is how I, Ruslan Averin, frame a setup like this, recorded at averin.com.
— Ruslan Averin
More market analysis by Ruslan Averin at averin.com.
