Virgin Galactic
Virgin Galactic is approaching the Commercial space industry slight different than its competitors at SpaceX or United Launch Alliance. Virgin Galactic is focusing on the tourism side of space.
Virgin Galactic under the leadership of Sir Richard Branson believe that space will attract a market of individuals who are hungry for the next level of exploration.
A journey into the final frontier of space is an element of life than many would strive for experiencing. Virgin Galactic aims to satisfy that desire by creating an enjoyable and safe method for exploring the outer levels of earths atmosphere, right at the edge of space.
The company said it has 15 trips in the pipeline for next year and expects to make 270 trips to space by 2023, generating more than $600 million a year in revenue and $270 million in earnings before interest, taxes, depreciation and amortization. – Investing
Spaceport America
The world’s first mulit purpose-build commercial spaceport is operational and ready. Located in the desert of New Mexico, Spaceport America is the home for Virgin Galactic’s human spaceflight headquarters and is the center of flight operations.
The project has been funded with the collaboration of the state of New Mexico, and the Sierra and Dona Ana Counties. The concept behind the facility is the bring together the cutting edge technology and design used by the space industry in collaboration with a setting ideal for pilot training. The Spaceport is a prime location for beginning and completing a spaceflight from Earth’s surface.
The Gateway will serve as the terminal for space exploration. The building is specifically designed to attract individuals and it was designed by world-renowned, UK-based Foster + Partners – Winner of an international architectural competition in 2007.
Technical Anaylsis
Since the start of 2020 Virgin Galactic has caught the eye of many investors after being given an outlook by Morgan and Stanley of about $25 a share. There continues to be many test in their flight systems and any news of a major milestone being achieved will certainly provide for some fuel for the stock value to continue on the upwards trending move.
We are currently moving upwards very rapidly. Investors who are long the stock should look to potentially secure some profits.
Virgin Galactic Holdings (NYSE: SPCE) has high trading volume and is option-able. Normally when we are trading options having a high average volume is great for providing support for movements in the underlying asset. Although with the lack of maturity for Virgin Galactic Holding the high trading volume can bring increase volatility.
Although the overall trend of the stock has been on an uptrend we must always protect our risk to the downside as skilled investors.
Based on the technical analysis we can see that price has been moving upwards in a progressive pattern. We are currently testing underneath a resistance level that has the strength to reverse price back towards the previous support level.
The next level of support sits at around $15.55, for price to retrace back down to this price level would require a 20% drop in price. This would be dramatic losses for any accounts currently exposed to (SPCE) that are not practicing proper risk management.
Since there is high optimism for the stock to continue to rise yet there is also risk to the downside one could take advantage of selling a call on the stock. If you own positions currently or if you do not the specifics of this strategy vary. Although the initial concept is similar.
We are going to sell the $20 call for example with the bias that the stock will drop and that our call will then loss value as a result. Which then allows us to cash in on the premium. The best possible outcome would be us arriving to our expiration date with the option expiring worthless resulting in us keeping the entire premium of the call that we sold.
Keep in mind that this strategy is bearish and should not be used if you have a strong bias for the underlying asset to continue to rise in value.
Virgin Galactic is certainly making some strides in the industry that are going to be interesting many investors and tourist in the next coming years. With the company still technically in the start up stages, there is incredible potential for what can come from the organization.
Disclosures
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options: https://www.theocc.com/components/docs/riskstoc.pdf
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