Trading the Starship Test Window: Implied Move vs Realised Move
Pre-test IV runs 15-25 vol points above baseline. Backtested realised moves are smaller. Here is the vol-selling trade and how to size it.
Pre-test IV premium
15–25 vol pts
Avg realised move
±3.5%
Avg implied move
±5.8%
Why pre-test IV runs hot
Markets price uncertainty, not expected value. A Starship test has a binary outcome (success vs failure), known timing and large potential moves on either side. Option market makers respond by lifting IV substantially in the run-up. Realised moves are larger than typical days but consistently smaller than implied — the classic IPO-era event-vol premium.
The trade: short premium into known test windows, with defined-risk wings to cap a true tail outcome. Iron condors centred at-the-money with wings 8-10% out have historically printed positive expectancy across the test history.
Key takeaways
- Implied moves into Starship windows typically exceed realised by 60-80%
- Defined-risk short premium structures have positive expectancy historically
- Always size for the tail — true loss-of-vehicle on a crewed flight is uncapped risk
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