"...SoftBank, the “Nasdaq Whale,” had been harpooned. ..:
Posted 05 September 2020 - 08:23 AM
DITTO FOR SPX BUBBLE.
From BARRON'S REVIEW:
By Matthew Klein | Friday, September 4
Harpooned Whale. Masayoshi Son, the head of SoftBank Group and its Vision Fund, once gave a presentation featuring a pie chart that represented sorrow, with slices of the pie labeled death, loneliness, and despair. Anyone looking at the value of Sons investment portfolio can relate.
Apparently, Son has been speculating on large-cap U.S. tech companies by buying billions of dollars of call options, in addition to owning the underlying shares. The leverage provided by the options and the consequent hedging activities of the options dealers helped drive the recent melt-up in stocks such as Tesla, Apple, Microsoft, Adobe, and Amazon.com. As recently as Wednesday, the tech-dominated Nasdaq Composite index was up almost 35% year-to-date and had just smashed through the 12,000 level for the first time.
From the close of Wednesday until about 10:40 a.m. today in New York, however, the Nasdaq lost roughly 10% of its value, with many of the highest-flying companies down even further. Tesla and Apple, for example, had dropped roughly 16% from the Wednesday close. SoftBank, the Nasdaq Whale, had been harpooned.
Some of those losses were reversed by Fridays close, but the rally wasnt enough to prevent the Nasdaq from losing more than 6% of its value in the span of two sessions. (The value of the call options on those stocks, which are bets on further price appreciation, fell much more.)
For perspective, trading volume in single-stock call options had roughly doubled in the past two months, which pushed demand far above the long-term average.
In theory, options are meant to protect investors from large swings in asset prices, so the buying by SoftBank and others ended up inflating conventional measures of risk that are based on the implied volatility of stocks. The VXN, which measures how much risk is embedded in the prices of puts and calls on the Nasdaq, for example, rose from about 30, where it had been from May through much of August, to more than 40 earlier this week.
But large-cap tech stocks werent the only asset with a recent wild ride. Lumber futurespossibly the lowest-tech financial asset in the worldhad soared 150% between the beginning of June and the peak on Tuesday. Before that, lumber prices had mostly moved in line with the Nasdaq. Lumber prices fell sharply earlier in the week, although theyve since rallied a bit in line with tech stocks. As far as we know, Masa Son didnt have any lumber exposure.
Posted 05 September 2020 - 08:32 AM
Posted 05 September 2020 - 08:37 AM
Softbank was exposed on Friday, there are 2 other firms, both are European.
They are moving $30 trillion market with a few billion. Buying a few billion worth of near term calls, forcing dealers to buy stocks and index futures to hedge. Spread between bid/ask widens because of this massive one sided option market therefore VIX & VVIX spike
Posted 05 September 2020 - 08:43 AM
Are you turning bearish?
Posted 05 September 2020 - 08:45 AM
dougie kass 5 hours ago
Out of Tesla puts and Tesla short.
Out of Apple short entirely.
Again I plan to reshort on strength.
Dougie From @realmoney
From Wednesday's high to the lows on Friday, nearly -10% drop in Nasdaq and S&P. $TSLA $550 to $37, $AAPL $138 to $116.
A good and swift start to the end of the virtuous cycle.
Wont be straight down in all likelihood.
Posted 05 September 2020 - 08:46 AM
Coming up on @realmoney
Was Last Week the End of the Virtuous Stock Market Cycle?
@jimcramer @tomkeene @SquawkCNBC @cnbcfastmoney @saraeisen @SullyCNBC @carlquintanilla @michaelsantoli @lizclaman @FerroTV @bobpisani
Posted 05 September 2020 - 10:09 AM
Posted 05 September 2020 - 11:11 AM
Emini Tic (@TicTocTick) tweeted at 11:53 am on Sat, Sep 05, 2020:
Weekly plan 9/8-9/11:
1. Primary thesis is balancing week between 3340-3460 zone
2. Rallies toward 3460 may be sold. Dips towards 3340 may be bot.
3. Break of either bracket will initiate next trend day (2-3% day)
4. Now 3414
Posted 05 September 2020 - 11:12 AM
$COMPQ bounced on Friday afternoon but it may be too little too late.
Breadth is in full breakdown and suggests the correction is still getting worse.
Few are paying attention to Breadth here, right when it could be most important. https://t.co/CynHq7JJzg