If you already own SPCX — whether you got allocated at the IPO, bought in the first week, or were assigned shares from a put you sold — the most overpriced thing in the market is sitting on top of your position, and it is paying you nothing until you sell it. The call side of this fresh chain is just as inflated as the put side. A covered call turns that bloated premium into cash in your account, and it is one of the lowest-risk ways an existing shareholder can use options.
The structure
A covered call is two things held together:
- 100 shares of SPCX that you already own.
- One short call you sell against them, at a strike above the current price.
The shares "cover" the call — if you are assigned, you already own the stock you would have to deliver. There is no naked risk. With SPCX around 190 and IV in the triple digits, an out-of-the-money call — say the 220 strike, 30 to 45 days out — might pay 6 to 8 dollars (600 to 800 dollars per contract).
That premium is yours immediately. Here is how it plays out:
| Scenario | Outcome |
|---|---|
| SPCX below 220 at expiry | Call expires worthless. Keep premium + shares. Repeat. |
| SPCX above 220 at expiry | Shares called away at 220. Keep premium + 30 points of gains (220 minus 190). |
In plain terms: I get paid 600 to 800 dollars right now to agree to sell my SpaceX shares at 220 — a price 16% above today. If it never gets there, I pocket the premium and write another call next month. If it rockets through 220, I still sell at a level I was happy with and keep every dollar of premium on top.
Why this is income, not speculation
The covered call does not add downside risk to your position — you already own the shares and their risk is already yours. What it does is monetize the one thing you were giving away for free: the inflated implied volatility above your cost. On a normal stock that premium is thin. On a one-week-old IPO with no IV history, it is extravagant. Collecting it lowers your effective cost basis every single month the stock does not blow through your strike.
For a shareholder who plans to hold SpaceX anyway, refusing to sell covered calls in this IV environment is leaving large, repeatable income on the table.
The one real cost: capped upside
There is no free lunch, and here is the bill. If SPCX gapped from 190 to 320 on some Starship triumph, my 220 call caps me — my shares get called away at 220 and I miss the moonshot above it. With a small-float name that can gamma-squeeze, that tail is not zero.
This is why strike selection is the whole craft of the covered call:
- Sell closer to the money (say 210): more premium, more downside cushion, but you cap your upside sooner and get called away more often.
- Sell further out (say 240): less premium, but you keep more of a big rally before your shares are taken.
I choose the strike by how much I want to keep the shares versus how much income I want. On a name I am itching to hold through a squeeze, I sell calls far out of the money and small, or I skip the call entirely in the weeks around a known catalyst. On a position I am neutral-to-mildly-bullish on, I sell closer and harvest more.
The wheel: turning it into an engine
Stack the two safe premium-selling trades and you get the wheel, a clean repeatable loop:
- Sell a cash-secured put at a strike where you want to own SPCX. Collect premium.
- If assigned, you now own shares at a discounted basis.
- Sell covered calls against those shares. Collect more premium each month.
- If called away, you are flat with a profit — go back to step 1 and sell another put.
Every leg of the wheel is selling overpriced premium, never buying it. Every leg has its risk defined either by cash set aside or by shares already owned. On a fresh listing with triple-digit IV, the wheel is the most efficient safe machine I know for converting that volatility into a steady stream of income, while you patiently accumulate or recycle a position in a company you actually want.
Management and the November catalyst
- Roll up and out: if SPCX rallies toward my short call and I want to keep the shares, I buy back the call and sell a higher strike further in time, usually for a net credit. I keep the shares, lift my cap, and still get paid.
- Take the assignment gracefully: if I get called away, that is a planned win, not a failure. I sold at a price I chose and kept the premium.
- Mind the binary: SpaceX's first public earnings land in November. I avoid selling cheap, close-to-the-money calls across that date — a violent upside gap could strip my shares right before the move I wanted. Sell the rich premium in the calm weeks; widen out or step aside into the event.
Bottom line
If you own SPCX, the inflated call IV is income you are currently donating to the market. The covered call collects it with no added downside, and the wheel turns the whole thing into a repeatable engine of selling overpriced fear and greed. Own the stock, sell the volatility, lower your basis every month.
This is not advice and not a recommendation. It is how I, Ruslan Averin, approach a position like this, recorded at averin.com.
— Ruslan Averin