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If You're Not In Space Stocks, Everyone Can Hear You Scream

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by Portfolio Armor
Saturday, May 09, 2026 - 13:03

Riff on the movie Alien

If You’re Not In Space Stocks, Everyone Can Hear You Scream

The tag line of the original Alien movie was, “In space, no one can hear you scream.”

On Friday, if you weren’t in space stocks, everyone could hear you scream.

Rocket Lab (RKLB 0.00%↑) lit the candle Friday after reporting a strong quarter Thursday night. The company posted record quarterly revenue of $200.3 million, up 63.5% year-over-year, record GAAP gross margin of 38.2%, and a record backlog of $2.2 billion, up 20.2% sequentially. It also ended the quarter with access to more than $2 billion in total liquidity, giving it plenty of runway for organic growth and acquisitions. (Rocket Lab Corporation)

The stock’s reaction wasn’t subtle. RKLB closed up 34.22% on the day, and the rally spilled over into other publicly traded space names:

The SpaceX IPO Tailwind

Part of this move is company-specific. Rocket Lab’s quarter showed real growth, real backlog, and real demand.

But part of it is broader. Investors are looking ahead to the anticipated SpaceX IPO, which has been reported as potentially coming as soon as this summer, with some reports suggesting a valuation north of $1.75 trillion, which would make it the largest IPO in history. If that IPO happens on anything like those terms, it could pull a lot more attention—and capital—toward the publicly traded space ecosystem.

That doesn’t mean every space stock is suddenly a buy at any price. This is still a volatile, speculative corner of the market. But when a sector starts moving together ahead of a likely mega-IPO, and one of its leaders just gave investors a fresh fundamental excuse to buy, you don’t have to squint to see the setup.

Already In Orbit

This move didn’t come out of nowhere for us.

One of Friday’s big space movers, Firefly Aerospace, was our Top Names trade on Friday:

We already had open positions in the other three names too:

Rocket Lab:

Redwire:

Intuitive Machines (we reused the same image in both because we liked it so much):

That doesn’t mean every trade will work, or that every space stock will keep flying. It means we had exposure to the theme before Friday’s move, and we structured that exposure in a way that fit the volatility.

How We Structured The LUNR Trade

Intuitive Machines is a good example.

When we opened that trade, the stock had already been moving sharply, and the options were reflecting that volatility. So instead of simply buying common stock or buying a naked call, we used a hybrid combo:

Today’s Top Names Trade

Lunar infrastructure / space services theme

The stock is Intuitive Machines (LUNR 14.97%↑), and our trade is a hybrid combo consisting of these four legs:

  1. Buying the September 18th, 2026 $26 call,

  2. Selling the March 27th, 2026 $26 call,

  3. Selling the March 27th, 2026 $18 put, and

  4. Buying the March 27th, 2026 $13 put,

For a max net debit of $1.75. The max gain on 1 contract is $606 (and the upside will be uncapped if the short March $26 call expires out of the money), and the max loss is $675. This trade filled at $1.75.

The point of that structure was to get longer-dated upside exposure while harvesting some of the near-term volatility and defining the downside.

As I wrote at the time:

This structure gives us:

  • A longer-dated upside call to benefit if LUNR catches another speculative leg higher into or after the next few quarters,

  • A short near-term call around the upcoming earnings date to harvest some of that volatility, and

  • A defined put spread “floor” to limit damage if the next momentum washout hits the space names again.

If we get another risk-off squall in speculative names like we did last week, we may be able to buy-to-close the short call here cheaply, locking in a partial profit while eliminating our upside cap.

A couple of weeks into Operation Epic Fury, we bought-to-close the short LUNR call at $0.20. Later in March, we exited the put spread at $0.20 too. Now the remaining position is the long September call, with uncapped upside.

That’s the advantage of structuring trades opportunistically in volatile names. At one contract, the original max loss was less than $700, so it was accessible for smaller accounts. Larger accounts could have entered the same structure with more contracts. Either way, the structure gave us multiple ways to improve the position before today’s space-stock rally.

Speculation, But Structured

Space stocks are speculative. There’s no point pretending otherwise.

They’re volatile, capital-intensive, and often dependent on government contracts, launch cadence, execution milestones, and investor appetite for long-duration growth stories. But that’s also why the options can be useful. When volatility is high, you can often sell some of it to help finance the exposure you actually want.

That was the idea with LUNR. It was the idea again today with FLY. And it’s why we’re willing to keep looking for defined-risk ways to get exposure to themes that can move before most investors are ready.

The SpaceX IPO may or may not come on the currently reported timeline. Rocket Lab may or may not keep levitating after today’s surge. The smaller space names will almost certainly remain jumpy.

But if this is the beginning of a broader rerating of public space stocks, we’d rather have structured exposure before the scream than chase afterward. If you'd like a heads up when we place our next trade, you can subscribe to our trading Substack/occasional email list below.

 

A Chance To Lock In Current Prices

Subscription prices for the Portfolio Armor Substack are going up from $40 per month/$400 per year to $50 per month/$500 per year on Thursday, but current subscribers will be grandfathered into the price they’re currently paying. So consider joining now, if you’re a free subscriber. If you join and change your mind, I’ll be happy to give you a prorated refund at any time.

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