There are a number of ways to play Virgin Galactic (NYSE:SPCE) for one simple reason: it’s almost impossible to know exactly how the SPCE stock story will play out.

Certainly, Virgin Galactic has a massive opportunity. “Space tourism” is likely to be a big business. The company will begin by targeting individuals with a net worth of $10 million or higher. That’s a bigger market than one might think: Virgin has estimated there are two million such individuals worldwide. Explosive growth in developing markets like China and India may only add to that total.

That’s not Virgin Galactic’s only opportunity, either. The same research and development efforts used to drive manned spaceflight could lead to hypersonic travel here on Earth as well. One analyst believes hypersonic travel could be a $1 trillion market by the middle of this century.

Of course, there’s no shortage of risks. Hypersonic travel is far from a sure bet. One tragic accident could impair the Virgin Galactic brand permanently. Competition will be intense. And investor patience over the years it will take just to get to positive earnings, let alone significant profits, will wax and wane.

As I wrote earlier this year, SPCE stock is one to buy only with money an investor can afford to lose. With the stock up 64% since then, the advice is even more true.

But what’s fun about Virgin Galactic stock — beyond “owning a little bit of a spaceship company”, as Virgin founder Richard Branson put it — is that the length of its timeline allows for multiple investing strategies. Each has its own risk and reward. It’s up to each investor to determine which one fits best.

Wait and See

This is my preferred strategy toward SPCE stock at the moment. Virgin Galactic remains years away from driving a profit. The company doesn’t have the market to itself. Private spaceflight companies include Blue Origin, backed by Amazon (NASDAQ:AMZN) founder Jeff Bezos; SpaceX, led by Tesla’s (NASDAQ:TSLA) chief executive officer Elon Musk; and Momentus, which is going public via a so-called “SPAC merger” with Stable Road Acquisition (NASDAQ:SRAC).

SRAC stock actually highlights the potential for a pullback in SPCE. Virgin Galactic, too, used a SPAC (special purpose acquisition company) to go public. But whereas that merger drew optimism, SRAC stock trades barely above the $10 merger price.

To be fair, Momentus and Virgin Galactic serve different aspects of the market; Momentus is a “space delivery company.” But the lack of enthusiasm in a SPAC group that has often seen enormous post-merger returns (as seen in the likes of Nikola (NASDAQ:NKLA) and DraftKings (NASDAQ:DKNG), to name just two) suggests that perhaps investor eyes are beyond space for the time being.

Indeed, even SPCE stock has pulled back rather sharply of late. And so, the case for simply waiting is that a better price is likely to be on offer at some point. Virgin Galactic still is years away from turning a profit. Investors at the moment have little information on what the space market as a whole will look like. In that context, it’s reasonable to ask: what’s the rush?

Using Options (Carefully)

Of course, if there’s no rush, investors can also use options to play SPCE stock. Options are not suitable for all investors, and those investors must understand the trade fully before putting it on.

But SPCE seems a strong candidate for either a cash-secured put or a covered call. These are essentially the same trade. In both, investors are selling off potential upside while receiving upfront cash that minimizes the downside.

For Virgin Galactic, an investor could buy SPCE stock at $18 (as of this writing). She could then sell a call option with a 19 strike that expires Jan. 15, 2021, for almost $3.

The option limits downside: she is paying a net of a little over $15 per share for the stock. But it also limits upside. If SPCE clears $19, the option will be exercised and the stock will be sold at that price.

Of course, that’s not a terrible outcome. The investor sells the stock for almost $22 ($19 strike price + $3 premium), making a profit in the range of 20%. If the stock falls below $16, the investor would have been better off simply waiting.

So, these are not risk-free trades. But an investor can create a scenario where the downside in the trade is owning SPCE at a price she would be happy to pay.

The other risk, admittedly, is that Virgin Galactic stock (pardon the pun) takes off, leading the investor to miss out on a big rally. But that kind of move may be unlikely given that SPCE has traded (mostly) sideways for months now, and given the lack of significant, potentially perception-changing news until 2022 at the earliest.

Owning SPCE Stock

There’s a simpler way to go: just buy the stock.

I don’t believe that’s a bad choice. Again, there’s big risk here, and investors need to size their position accordingly. The bull case is that the company succeeds and is worth tens of billions of dollars, against a current market capitalization barely above $4 billion.

But as Branson himself pointed out, owning SPCE stock is kind of fun. It’s exciting to own “a spaceship company.” It might be exciting for a young family member interested in space to be gifted the stock as well.

Personally, were I to take a long position, I’d probably get cute with options and try to lower my long-term cost basis. But, if investors are willing to take on the risk and willing to be patient, SPCE stock remains an intriguing long-term play, even at a relatively higher price.

Going Short

It’s worth noting that there’s a bearish option as well: shorting SPCE stock or buying put options that bet on its decline.

This is a risky strategy, for a number of reasons. Most notably, shorting any stock can be dangerous, since losses are theoretically infinite. They can exceed 100%. Put options in SPCE aren’t cheap, and in the near-term have a high risk of being zeroed out.

But there is a short case, and indeed about 27% of Virgin Galactic’s floated shares are sold short. (That adds to the danger of shorting, as high short interest can lead to a short squeeze.) Again, it’s possible that over time SPCE stock winds up going to zero. In the interim, the chart does not look particularly attractive; it looks right now like SPCE is following a past pattern of rallies fizzling out before the stock heads back to $15.

And, again, it probably takes just one adverse event to significantly impair the bull case. A failed launch or a lost ship would cost the company millions of dollars it would have to recoup through selling more stock. It would also damage the brand, and the hopes that Virgin Galactic can transform how, and where, humans travel. There is a short case here.

To be clear, I’m not recommending this strategy. I’m certainly not following this strategy. But the fact that many traders are is a reminder of the risks, both short term and long term, that surround this intriguing and high-reward stock.

On the date of publication, Vince Martin did not have (either directly or indirectly) any positions in the securities mentioned in this article.