Virgin Galactic Stock Soars After FAA Investigation Concludes

The equity is sitting comfortably above its 2021 breakeven level

Deputy Editor
Sep 30, 2021 at 2:24 PM
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The shares of Virgin Galactic Holding Inc (NYSE:SPCE) are soaring this afternoon, last seen 13.1% higher to trade at $25.51. This pop comes only a day after a Federal Aviation Administration (FAA) investigation concluded the space exploration company was cleared to resume launches. The FAA's inquiry stemmed from an incident in July, in which Virgin Galactic's flight deviated from its path without communicating the change to the agency, though the company has now addressed those communication issues. 

Options traders are already responding to the news. So far, 229,000 calls and 73,000 puts have crossed the tape, which is triple the intraday average. Most popular is the weekly 10/1 26-strike call, followed by the 25-strike call in the same series, with positions being opened at both. This indicates traders see even more upside for Virgin Galactic stock by the time these contracts expire tomorrow. 

Now may be a great opportunity to weigh on the security's next move with options. The equity's Schaeffer's Volatility Scorecard (SVS) is maxed out at 100, suggesting SPCE has usually exceeded option traders' volatility expectations in the past year. 

When we last checked in with Virgin Galactic stock, Jefferies had just initiated coverage of the security. The bump it saw after that helped the equity notch its first close above the 320-day moving average since early August, though the stock has pulled back below that trendline in the weeks since. Year-to-date, the security still sports a 7.5% lead.

A short squeeze could push Virging Galactic stock even higher. Short interest rose 8.8% in the most recent reporting period, and the 26.81 million shares sold short now account for 13.9% of the equity's available float.


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