These Options Traders Think Virgin Galactic Stock May Skyrocket

Virgin Galactic Holdings Inc SPCE is down over 50% from its Feb. 4 high of $62.86, but options traders are betting the bottom may be in.

The Virgin Galactic Trades: At 12:31 p.m. Monday, a trader executed a call sweep of 550 Virgin Galactic options with a $38 strike price expiring on May 21. The trade represented a $127,000 bullish bet for which the trader paid $2.31 per option contract.

At 12:32 p.m., a trader executed a call sweep of 458 Virgin Galactic options with a $29.50 strike price expiring on April 16. The trade represented a $109,900 bullish bet for which the trader paid $2.40 per option contract.

At 12:32 p.m., a trader executed a call sweep of 289 Virgin Galactic options with a $29 strike price expiring on April 16. The trade represented a $77,200 bullish bet for which the trader paid $2.67 per option contract.

At 1:30 p.m., a trader executed a call sweep of 779 Virgin Galactic options with a $30 strike price expiring on April 16. The trade represented a $190,900 bullish bet for which the trader paid $2.45 per option contract.

At 1:30 p.m., a trader executed a call block of 1,838 Virgin Galactic options with a $37 strike price expiring on April 16. The trade represented a $163,600 bullish bet for which the trader paid 89 cents per option contract.

Together, the traders are betting almost $668,600 the share price of Virgin Galactic is going higher.

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price.

A sweeper pays market price for the call options, instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately. These types of call option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

When a block trade occurs, it indicates a hedge fund or institution has taken an options position. A block trade always involves large sizing and is typically handled by a blockhouse outside of the open market.

Since block trades don’t occur on the open market, the large size of the trades doesn’t create volatility in the stock being traded. Like sweepers, blocktrades indicate “smart money” has entered a position.

What Virgin Galactic Has Coming Up: Virgin Galactic plans to unveil the first vehicle of its SpaceShipThree March 30 and expects to recommence testing of its rocket-powered spaceship from its SpaceShipTwo fleet this May.

Furthermore, when Cathie Wood released the holdings of ARK’s new space exploration and innovation ETF, Virgin Galactic was included.

So far, Wood has purchased 672 shares of Virgin Galactic at a cost of $19,884.48, which currently makes up 1.95% of the ETF’s holdings. Options traders could be betting that proportion is set to increase in the near future.

SPCE Price Action: Shares of Virgin Galactic lost 1.28% Monday, closing at $29.21.