Biotech IPO Wave Meets the SpaceX Lockup Test as Options Flows Hit Records

The August IPO market opened with a burst of biotech issuance and closed its first full week with a record options session, an all-time high in the S&P 500, and the largest lockup expiration in history. These are not three separate stories. They are the same story — one about how supply, demand, and market plumbing interact when a market breaks out to new highs even as its most-watched newcomer absorbs a flood of new float.

The Biotech IPO Surge: All Four Deals Upsized

The week of August 3–7 saw four biotech IPOs price on US exchanges, and every single one was upsized at pricing. Together, Attovia Therapeutics (ATTO), Braveheart Bio (BRVE), BlossomHill Therapeutics (BLSM), and Latigo Biotherapeutics (LTGO) raised $1.17 billion^[1].

The pricing details tell a story of robust demand:

Attovia, a Phase 1 biotech focused on chronic itching and IBD, priced at the top of its range and surged 29% in its Nasdaq debut^[2]. Braveheart Bio popped 68% on its first day. BlossomHill and Latigo were both upsized from their prospectus terms — Latigo increased its share count from 16 million to 19.2 million, adding $73.6 million in proceeds versus midpoint pricing under original terms^[1].

The backdrop explains the enthusiasm. US drugmaker IPOs produced a weighted average return of 64 percent, according to Bloomberg data cited on August 5^[1]. When recent IPOs in a sector are working, underwriters push for larger deals and investors oblige. The Renaissance IPO Index was up 18.6% year-to-date as of August 6, outpacing the S&P 500’s 13.4% gain^[3].

But the base-rate question matters here. Biotech IPO performance is notoriously cyclical — a hot stretch draws out more supply, and the marginal deal quality deteriorates. The fact that all four deals were upsized signals strong demand today, but it also means more supply is clearing at a pace that has historically preceded cooler windows. The question is whether this is a durable reopening of the biotech IPO market or a late-summer burst that exhausts itself before fall.

The SpaceX Lockup Cascade: 911 Million Shares Unlocked

The same week, the largest IPO in US history faced its first real market-structure test. SpaceX (SPCX), which went public on June 12 at $135 per share, saw its first lockup restrictions expire on Thursday, August 6, freeing 911.5 million shares for trading — more than the 639 million shares sold in the IPO itself^[4].

That single release represented roughly 7% of shares outstanding. By December 8, a staggered series of lockup expirations will push SpaceX’s tradeable float to 40% of the company^[5]. The remaining 60%, including Elon Musk’s 6 billion-plus shares, stays locked until mid-2027^[4].

The schedule ahead is dense:

The stock’s trajectory has been volatile. After surging above $225 in the weeks following the IPO — briefly pushing SpaceX’s valuation near $3 trillion — the shares fell below the $135 IPO price for three straight weeks^[5]. The selloff accelerated after SpaceX’s first earnings report on August 4, when the company disclosed capital expenditures more than twice as high as revenue, alongside steep operating losses and massive planned AI infrastructure spending^[4].

Yet on the day of the lockup expiration itself, SpaceX rose 1.4% to $109.86 with over $23 billion in shares traded by midday — its busiest session since joining the Nasdaq 100 on July 7^[5]. Mizuho analysts noted that shares becoming eligible for sale does not mean the full tranche will be offered into the market^[4].

There are two ways to read this. The bullish interpretation: the market absorbed the largest lockup release in history without a breakdown, suggesting underlying demand is deep enough to absorb the supply. The bearish interpretation: one day’s price action is not a verdict, and three more large tranches arrive over the next two months, each adding incremental selling pressure to a stock already down more than 25% from its June peak. The historical base rate for IPO lockup expirations is mixed — many pass quietly, but the ones that matter tend to matter gradually, as steady insider selling weighs on price over weeks rather than crashing it in a session.

What adds a wrinkle is SpaceX’s corporate complexity. The company merged with Elon Musk’s xAI in February at a combined valuation of $1.25 trillion, and agreed to acquire Cursor for $60 billion in a deal expected to close in Q3 2026^[4]. The AI infrastructure spending that spooked investors in the earnings report is tied to that strategic direction. Whether the market rewards that vision depends on execution that is still early-stage — and on whether the float can absorb the supply without forcing price discovery to a lower level first.

Record Options Volume and the Leveraged ETF Amplifier

The same week the S&P 500 broke above 7,700 for the first time, the options market set records^[6]. More than four million S&P 500 index calls traded on Tuesday on Cboe Global Markets, a 10% increase over the previous record set in May. Zero-day-to-expiry calls accounted for 2.4 million of those trades. The put-to-call ratio among all options plunged to 0.83, the second-lowest on record^[6].

By Friday, the VIX fell to its lowest level since January as the S&P 500 added 0.6% for a weekly gain of 3.6%^[6]. Total SPY open interest ended the week at 27.4 million contracts, in the 93rd percentile over the past year. The most popular strike by combined open interest is the 760-strike on SPY — about 1.7% below Friday’s close — where 94,000 open puts could provide a support floor. On the upside, 114,000 open calls at the 785-strike mark the next resistance^[6].

The semiconductor sector led the rally, with the iShares Semiconductor ETF (SOXX) advancing more than 7% on the week^[6]. That matters for market structure because semiconductors are also the epicenter of a separate force: leveraged ETF rebalancing.

Bloomberg reported on August 9 that the leveraged ETF boom is creating new ways to profit from intraday volatility in tech stocks, as daily rebalancing of funds tracking the most volatile names amplifies both gains and losses^[7]. The semiconductor sector has been the hottest area for these intraday momentum strategies^[7]. The effect is not theoretical — in South Korea, single-stock leveraged ETFs tied to Samsung Electronics and SK Hynix contributed to a KOSPI selloff that triggered circuit breakers on two consecutive days^[8].

The mechanism is straightforward: leveraged ETFs must rebalance their exposure daily, and when the underlying moves sharply, that rebalancing adds mechanical buying or selling near the close that can extend intraday trends. The more assets in these products, the larger the end-of-day flow. In a low-VIX environment where realized volatility is compressed, these flows can create pockets of sudden dislocation that catch participants off guard.

The interaction with the options market is worth noting. When call open interest is at the 95th percentile and 0DTE volume is setting records, the dealers’ hedging footprint is large. In a rising market, dealers short calls become long delta and must sell the underlying to hedge, which can dampen upside — or, if the market reverses, the unwinding of those hedges can amplify downside. The combination of record options positioning and leveraged ETF rebalancing means the market’s intraday plumbing is more mechanically driven than the calm VIX reading suggests.

Secondaries and Buybacks: The Supply-Demand Counterweight

While new IPO supply flows in from biotech, the secondary market is also active. Primo Brands (PRMB) announced a 20 million-share secondary offering by an affiliate of One Rock Capital Partners on August 6, with Primo itself agreeing to repurchase $10 million of shares from the selling stockholder^[9]. REGENXBIO (RGNX) filed for a $100 million common stock offering in mid-July^[9].

On the buyback side, Deutsche Telekom increased its 2026 share buyback program by up to €3 billion on August 6^[9]. Ericsson continued repurchasing its own Class B shares during the week of August 3–7^[9]. These buybacks offset some of the supply pressure from new issuance, though they are concentrated in different names and sectors than the IPO flow.

What to Watch Next

1. SpaceX’s August 20 lockup tranche — Another 319 million shares unlock. If the stock holds above the $108–110 zone through that release, the base case strengthens that the float can absorb the cascade. If it breaks below, the staggered September and October tranches become a growing overhang.

2. Biotech IPO pipeline depth — The week ahead has only one sizable US IPO: Londian Wason New Energy Tech (FOIL), a China-based copper foil supplier for lithium-ion batteries, aiming to raise $75 million at a $1.6 billion market cap^[3]. The deal has 115% indicated interest at the midpoint^[3]. Also notable: Robinhood Ventures Fund II (RVII), a closed-end fund holding dozens of smaller tech startups, plans to raise $200 million^[3]. Whether biotech issuance continues at the August pace will signal whether the window is genuinely open or temporarily ajar.

3. Six IPO lockup releases in the week ahead — Renaissance Capital counts six lockup expirations coming, including for recent IPOs Csquare (CSQR) and Standard Nuclear (STDN)^[3]. Standard Nuclear is already down 43.7% from its offer price^[3], making its lockup release a more acute supply test than SpaceX’s.

4. Options positioning at key strikes — With SPY call open interest at the 95th percentile and the 785-strike holding 114,000 open calls, a push toward that level would test whether dealer hedging dampens the move or fuels it. A pullback toward the 760-strike, where 94,000 puts sit, would show whether that put wall provides the support the positioning implies.

5. Leveraged ETF rebalancing flows — Watch the closing auction volume in semiconductor-linked leveraged products. If SOXX and single-stock leveraged ETF assets continue to grow, the end-of-day mechanical flows will become a more persistent feature of intraday volatility — visible in the data even when the VIX suggests calm.

FN2 Research provides financial research and education, not personalized investment advice. Nothing in this article constitutes a recommendation to buy, sell, or hold any security.