SNII / Rigetti - another quantum computing company that looks set to despac following IONQ’s debut last year.
Merger vote is set for 28 Feb. Redemption deadline is 5pm ET, 24 Feb.
This will be an interesting one to watch depending on market conditions end Feb – IONQ nose dived following the redemption deadline before soaring to the 20s and now trades around 12-13 today.
Adding this as a placeholder for now with more to follow.
Thanks for sharing, was just looking at this.
Will be putting in a buy order for a few 3/18 10P for $1 ea shortly
Likely that MMs will adjust much higher at open, perhaps $1.75-$2.00, but just in case the order squeezes in between the bid and ask…
Gonna try to get a cheap fill on the March 10p as well. Today there were only a few fills for this option, at 1.15 and 1.20. Will be tough getting any cheaper I think, but worth a shot I suppose.
Onslaught of May 12.5p here, notably they all seem to be from one person based on the transaction times.
Some interesting blocks of calls too, but the sizing is not much compared to our May 12.5p guy
Proxy statement for the merger meeting just came out
https://www.sec.gov/Archives/edgar/data/1838359/000119312522033030/d248645d424b3.htm
Redemption deadline is 5pm ET, 24 Feb so depending on whether shares have settled etc, we could see the NAV floor fall away as early as 2 days before
Thanks for posting this I put in for some March 10’s at a dirt-cheap price - doubt I will get filled but maybe I get lucky
IV has spiked on the SNII puts so if you are bearish you may want to think abt call credit spreads instead.
You may also want to wait and see given current sentiment around the speculative growth names. IONQ is up 11+% today and stuff like BRCC has spiked as well… lol
Awesome find once again @hansolo, you’ve been hitting it out with these!
Some quick DD on Rigetti:
From their website:
Rigetti Computing is an integrated systems company. We build quantum computers and the superconducting quantum processors that power them. Through our Quantum Cloud Services (QCS) platform, our machines can be integrated into any public, private or hybrid cloud.
In layman’s terms, they work in quantum computing, Now I am no expert, but quantum computing is somewhat theoretical and somewhat practical at this time.
SPAC holders will own 4% of the company, which will have an EV value of $1.15B. These guys are pretty much pre-revenue and are forecasting a CAGR of 140% which is crazy given this company is less than a decade old. The valuation is based on nearly 2X P/S ratio of 2026 estimated revenue. You have got to be kidding me.
Needless to say, I think you’re going to see a lot of redemptions and this crash to $5. I’m not sure if there is a potential for a ESSC esque squeeze once we see the redemption numbers, I’ll leave this for other members with better expertise to weigh in.
From a fundamental standpoint I don’t see this stock holding it’s NAV value once the merger goes through.
A risk case scenario is they actually become leaders in quantum computing and become a $100B company. Not an expert, I don’t see that happening.
I’m going to play this one a bit heavier, good luck all!
So I opened some CCS (call credit spreads) which I got filled at a decent price, however I did not realize the actual individual positions which completely screwed me so this an expensive lesson for me and a word of warning for those looking into this instrument.
I got filled at the 5/7.5C for a credit of $2.3, but my fills were $4.96/$2.66. This mean my short side was sold with zero to negative intrinsic value to the buyer as the stock was hovering around $9.96-$9.99. In other words, he was able to buy the option and exercise at a cost of $9.96 sell at ~$9.99, a free $0.03 guaranteed profit. This forced me to exercise my long side options which I bought with some extrinsic value and immediately forfeit said extrinsic value.
Currently there is no way for me to recover my loss until the bids on my long options actually have some extrinsic value to them and they are currently asking for well below.
Make sure you check the bid and ask spreads before you enter into any trade. I’m not sure of any broker that allows you to set the sell limit on the short side, but that would prevent this from happening. I would say this is typically a rare case as you will almost never find the bid assume negative extrinsic value as it makes the option worthless and guarantees profit to the buyer. Specifically on a SPAC that has a NAV floor, this would be an infinite money glitch only limited by the amount of options you can buy.
I might play the 7.5p/12.5c Mar straddle for SNII instead as while I’m fairly sure it will move, I’m not as certain that downwards is the only possible direction.
Price action around key comp IONQ has been surprisingly strong and while I’m fairly convinced it is grossly overvalued, the market clearly believes otherwise. Again, perhaps waiting till next week may be the right move as prevailing market sentiment around redemption deadline/merger date may influence how many people are willing to pile into such speculative growth names
I agree with you, IONQ is showing some very weird support despite being valued at $3B and a P/S ratio of nearly 300. Supposedly they have a lot of partners, are held by large institutions including some investments from Apple, Amazon, and Google. The retail base seem to be a lot of Korean foreign holders where IONQ may be a well known name. All of this was taken from context from various commentors on investing boards so take it all with a grain of salt, but there does seem to be some verifiable information.
https://finance.yahoo.com/news/ionq-hyundai-motor-partner-quantum-130000754.html
Kinda funny IONQ and Hyundai whose new EV is called IONIQ5 are partnering.
Financials are interesting, IONQ has a Sep YTD revenue of less than $500K, but their deck shows an estimated revenue of $5M for 2021, so they’re off by about 90% YTD. According to Rigetti they already have $7M revenue for 3Q YTD 2021. I’m not sure if there’s anything funky regarding accounting or revenue recognition here as I haven’t had time to dive into the details.
The strength of these companies I believe are due to investors believing these quantum computing companies will be the next Intel, AMD, NVIDIA, etc.
Really hard to make a call on this one, straddles may be the way to go. There is a lot more premiums to pay for the puts, but if this follows IONQ it may swing wildly each way. Good call to watch IONQ, will wait and see what happens and enter in positions next week.
Gonna try to take an entry tomorrow.
March 10p has been ranging from 1.75 (lucky) to 2.00. I’m gonna try for a 1.85 or 1.90 entry.
Just a reminder that we are 2 days from the redemption deadline on 24 Feb which means given T+2 settlement mechanics, we might expect to see some movement starting today.
Note that this is quite a risky play and I would caution playing the 10p especially at these entries which essentially require a 0$2 move to break even. If you want to express a bearish view, consider selling the 7.5/10c credit spread instead for a better risk/reward
It’s a $2 move to breakeven only if you held to expiry. A puts play on SPAC floor removal should be cut relatively quickly since there is a risk of the stock being pumped as a low floater depending on redemption numbers.
March 10p should be profitable on the way down similarly to IVAN MCMJ, etc. when they started falling.
I managed to get 1 fill out of 10 at 1.85 at open.
Floor fell out on this, unfortunately my positions were forced to exit due to bad fills on my CCS (completely my fault) and I never re-entered.
So is this about 2/3 of shares redeemed?
https://twitter.com/JulianKlymochko/status/1498664438584340480
Yup looks like approx 2/3 redeemed, much higher than IONQ back then. Not sure how it’ll trade in the coming days though, maybe better to play around the future PIPE unlock given the relative strength
Finally closed both my puts from 1.85 and 1.90 → 2.50 today. Taking this off the watchlist now.
