To The Moon, Alice! Virgin Galactic Options Volume Explode As Retail Piles In

In case you missed it… there’s a futurist, technology stock that has utterly exploded higher this year against a background of absolutely nothing new fundamentally.

No, it’s not Tesla. It’s Richard Branson’s Virgin Galactic (SPCE)… which as of yesterday’s highs was up 210% year-to-date – double the performance of Elon Musk’s lowly little stock

Source: Bloomberg

Notably yesterday was a 25% drop from the highs (bear market) but this morning SPCE has taken off once again…

Though the company is just a fraction of Tesla in terms of market value, the frenzy around its shares is similar.

A look at the upper chart shows a similar sudden spike pattern similar in TSLA shares. That spike in TSLA coincided with a massive explosion at the time in options trading volume…

And looking at SPCE’s options trading, we can see the same pattern of sudden explosion in call buying as every millennial jumps on the bandwagon… because it’ easy, right?

More than 91 million shares traded hands on Tuesday. That’s the most since the company’s September 2017 public offering, more than 27-times the average volume, and dwarfs the activity seen in Tesla.

As Bloomberg notes, Virgin Galactic has become a favorite among retail investors, judging by activity on message boards like r/wallstreetbets. 

what stage of the cycle is this @awealthofcs @michaelbatnick pic.twitter.com/rBrGyLZhKM

— LVD (@LVDTrades) February 4, 2020

Gains are snowballing, options traders are piling in, chatrooms are lighting up… what could go wrong?

We give the final word to Morgan Stanley analyst Adam Jonas, who offered a warning to investors chasing the rally that recent gains appear “to be driven by forces beyond fundamental factors.”