By Laura Matthews and Saqib Iqbal Ahmed
June 16 (Reuters) - Trading in SpaceX options kicked off with heavy volume on Tuesday, underscoring strong investor demand for a new way to bet on the future of Elon Musk's aerospace company.
More than half a million contracts changed hands in the first hour of trading as investors piled into the newly listed company, making SpaceX the most heavily traded name ever among companies on their first day of trading options, according to Trade Alert data.
"Early option
volume indicates another SpaceX success," said Seth Hickle, chief investment officer at Mindset Wealth Management.
Options give the holders the right, but not the obligation, to buy and sell shares of the rocket and spacecraft manufacturer at a predetermined price within a set time period. They offer investors a low-cost way to gain exposure to a company's stock and can also be used to hedge against risk or to speculate on price movements.
"SpaceX options opened with extremely heavy demand," said Chris Murphy, co-head of derivatives strategy at Susquehanna, a market maker.
"Investors continue to chase upside in high-beta AI and space-linked winners," Murphy said.
Some 675,000 options contracts changed hands by 10:40 a.m. ET (1440 GMT), with calls leading puts 1.5-to-1, according to Trade Alert data.
Calls give the buyer the right to purchase a stock at a set price by a specific date, while puts give the buyer the right to sell at a set price.
"It's really kind of going nuts," said Brent Kochuba, founder of options analytic service SpotGamma.
Options on SpaceX were the second-most heavily traded contracts on individual companies on Tuesday, topped only by Tesla, Trade Alert data showed.
The robust showing in SpaceX options follows a strong debut on Friday, when shares of the company surged more than 25%, pushing its valuation above $2 trillion as investors piled in to bet on the sprawling empire, which spans rockets to AI.
The shares rose more than 8% on Tuesday, sending its market valuation above that of Amazon.com.
(Reporting by Saqib Iqbal Ahmed and Laura Matthews in New York; Editing by Chizu Nomiyama, Rod Nickel)
