Brent Slava, Executive Producer, Stock Trader Network

[David Attenborough-esque voice over] Similar to the king salmon swimming upstream each summer to get to the safer, oxygen-rich waters of its own birth, the astute trader finds a contrary nugget in a crowded room. 

Case in point this week: SpaceX (SPCX), on the day of it’s first IPO lock-up expiring. (Check out Nick Brown’s schedule of SpaceX’s other IPO lock-up expirations.)

Heading into an IPO, limitations are set on classes of original shareholders, those before the public offering. Requirements prohibit certain investors from selling shares prior to an agreed-upon date after the IPO. The precaution is to prevent insiders from dumping the stock—and thus the price—during the first few sessions. 

Upon this lock up expiring, those shares which were limited now become available for sale. Available but not required to be sold. The stakeholder has the option to hold or sell. 

This first SpaceX lock-up expiration had over 900 million shares become available for sale today. 

The idea for the trade, as apparently a lot of people must have been scheming on: early shareholders in SpaceX, who could have originally been awarded stock at pennies or dollars, would be eager to book their profits. 

But the topic and trade catalyst were telegraphed. “You have a lot of people who are front running this trade and thinking ‘They are gonna absolutely hammer this stock!’” as STN’s Chief Strategist, Dennis Dick, impersonated on this morning’s PreMarket Prep. 

“So is this Crowded Trades 101?” Triple D asked, hinting at what must have been many traders short into this catalyst, anticipating the stock would go down on the availability of a possible sale.

That does seem to be the case today, with shares of SpaceX trading higher, up almost a couple dollars to around the $110 level. 

Check out this tweet from SpaceX CEO Elon Musk, by the way,