Good Morning!

Before I share today’s whale watching segment, I just want to say that this is the most interesting options flow that I’ve seen since I started writing this letter to you all a few months back.

Most people would gate keep this information. Or at the very least reserve it for the paid section of their publication.

But I want you all to see it and benefit from it.

Before I share… Our live alerts have been crushing!

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Whale Watching is our recurring segment where we highlight the most significant options order flows from the previous trading day.

There is so much to unpack with this one. This will be a longer “Whale Watching” segment than normal.

1) The Flow: This flow is some of the most bullish that I’ve seen. My perfect flow scenario is mid term in length. Short term flow can be amazing, but it can also be fickle as things need to go perfect or theta burn absolutely can crush your value. Long term flow can be great but can take months or even a year for the play to materialize. This flow is around a month in length which is perfect. This allows time for it to materialize without immediately being destroyed by theta if things don’t immediately go as planned.

The flow was heavy! Just this contract alone brought in nearly $13 million in premium. $11.5 million of that was filled at the ask or above the ask which is incredibly bullish and shows urgency that someone was looking to get filled and didn’t care about the price. Most of the orders were sweeps as well. This too indicates bullishness and urgency to build a position no matter the associated costs.

2) The Story: The story on this one when combined with the flow is where things really pick up. SATS owns ~2% of pre IPO SpaceX shares. SpaceX is setting up to be the largest IPO of all time and will likely command a 2 TRILLION dollar market cap on its opening day of trading. This would put the value of the shares of SpaceX SATS owned at a higher value than the entire market cap of the business!

But let’s keep going… SATS recently filed 10-Q shows 22.65 Billion dollars due in from an acquisition with AT&T. This shows the rare combination for SATS of being both a momentum and value play in the upcoming month.

3) The Playbook: I have no doubt that SpaceX will absolutely be the largest IPO to ever hit public markets. I have no doubt the amount of hype and mania that will come with it. Not only will they go public at absurd prices, but I believe retail mania will run up the price even further on the opening day of trading. I do think institutions will end up dumping a lot on retail during this time. That’s normally the IPO playbook.

I believe SATS could absolutely have a big run up into and potentially even during the SpaceX IPO. Their pure play exposure will certainly garner attention and be a sympathy play on the SpaceX IPO.

I will likely be securing some contracts in the open market today to ensure that I have a position for the scenario I believe to be playing out.

4) The Gamma: I decided to pull gamma out on SATS and see how we were positioned and guess what… We’ve got massive positioning overhead with a June 18th expiration:

I could absolutely be wrong in how this plays out. Don’t be reckless and don’t take a position just because I am. Do your own research and if you do trade be sure to size according to the amount of risk you are willing to take.

SPY currently sits down a bit premarket. We sit right around 738 right now which is a light gamma zone. 738-740 doesn’t have much going on. We have heavy gamma stack at 741 and overhead and we have negative gamma stacked at 737 and below while peaking at 735.

This is setting up to be a choppy day as gamma sits right now. We have gamma and positioning fighting in both directions. I will have to watch to see how it materializes once markets open but right now I don’t have a heavy directional lean. If I had to choose I am slightly biased towards the downside and gamma is stacked heavier there and the macro news cycle wasn’t the prettiest over the weekend.

We will wait and see a direction and see if there is a trade we can make on this one.

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Hope to see you there!