SoftBank unmasked as ‘Nasdaq whale’ that stoked tech rally

[GatorCatsi]

Crazy times. Everyone knows it's a rigged game. No one can afford not to play.

From the Financial Times:

Unusually, single-stock call trading volumes have surged beyond the average daily volumes of calls on the broader US stock market, and are almost as high as the level of trading in index puts — which give the buyer the right to sell at a pre-set price and act as a popular form of insurance against stocks falling.

The size and aggressiveness of the mysterious call buyer, coupled with the summer trading lull, has been a big factor in the buoyant performance of many big tech names as well as the broader US stock market, according to Mr McElligott.

This week, he warned that dynamics around options meant the heavy purchases forced banks on the other side of the trades to hedge themselves by buying stocks, in a “classic ‘tail wags the dog’ feedback loop”...

One person familiar with SoftBank’s trades said it was “gobbling up” options on a scale that was even making some people within the organisation nervous. “People are caught with their pants down, massively short. This can continue. The whale is still hungry.”

Zero Hedge adds:

...If SoftBank "forgot" to take profits and has been piling on gamma, it is now entirely at the dealers' mercy as we first explained yesterday, which incidentally explains today's continued plunge in tech names as traders brace for the unwind of all that gamma.

Of course, that's the last thing SoftBank - which already is hurting from the dismal performance of so many of its recent investments - wants, and is why a banker "familiar with the latest options trading activity" told the FT that Thursday’s market pullback would have been painful for SoftBank (well, duh), and "he expected the buying to resume" unless of course the dealers double down and sell all those same calls that exploded in recent days.

The FT then added, perhaps for the benefit of its Robinhood readers that "a larger and longer-lasting stock-market decline would be more damaging for this strategy, and would probably involve rapid declines."

While there was nothing actually new in the FT report beside merely confirming what our readers already knew, all we can say is that we sincerely hope that Masa Son publishes all his material derivative holdings so the public can take the other side and finally crush this grotesque company which last October we said was the "Bubble Era's "Short Of The Century"."

 

[FireFoley]

A much better capitalized, modern day "Tokyo Joe". It has been weird how active weekly options have been relative to normal Instead of using others, Softbank (we all know who calls the shots there) used their huge war chest to drive up their huge stock holdings, unload the stocks and even if the options expire worthless they make way more in their stock sales than their option losses. And had the stock prices continued north they could have exercised and bought back the stocks or just sold the calls for even more profits. It sure must be nice to play with BILLIONS.