Post by Dave on Sept 7, 2020 2:40:47 GMT -8
Good morning, it’s Labor Day Holiday and I hope everyone is enjoying this long weekend with family and friends. Tomorrow may be a busy day as the markets rush back into the theater after realizing that there is no fire and everyone scrambles to get a better seat.
SoftBank Stock Tumbles With Son’s Foray Into Options Trading
Tony Zhang's Apple Options Trade
SoftBank Stock Tumbles With Son’s Foray Into Options Trading
(Bloomberg) -- SoftBank Group Corp. shares tumbled in Tokyo after reports that the Japanese conglomerate made substantial bets on equity derivatives amid the surge in technology stocks.
SoftBank shares dropped as much as 8%, the most on an intraday basis since March. The stock had gained 33% this year before Monday.
The Financial Times, Wall Street Journal and Zero Hedge reported that SoftBank was making massive bets on technology stocks using equity derivatives. The FT labeled SoftBank the “Nasdaq whale” that “stoked the fevered rally in big tech stocks,” though it didn’t include details of any trading.
The reports touched off concerns that billionaire founder Masayoshi Son is embarking on a risky endeavor in unfamiliar territory, which could lead to losses like those SoftBank suffered after its enormous bet on office-sharing startup WeWork. The stock decline came despite an FT report that SoftBank now has gains of about $4 billion from the derivative bets.
“SoftBank was riding the Nasdaq wave like a mutual fund,” said Mitsushige Akino, senior executive officer at Ichiyoshi Asset Management Co. “The market is falling now and investors have zero visibility, so they are selling SoftBank stocks.”
SoftBank shares dropped as much as 8%, the most on an intraday basis since March. The stock had gained 33% this year before Monday.
The Financial Times, Wall Street Journal and Zero Hedge reported that SoftBank was making massive bets on technology stocks using equity derivatives. The FT labeled SoftBank the “Nasdaq whale” that “stoked the fevered rally in big tech stocks,” though it didn’t include details of any trading.
The reports touched off concerns that billionaire founder Masayoshi Son is embarking on a risky endeavor in unfamiliar territory, which could lead to losses like those SoftBank suffered after its enormous bet on office-sharing startup WeWork. The stock decline came despite an FT report that SoftBank now has gains of about $4 billion from the derivative bets.
“SoftBank was riding the Nasdaq wave like a mutual fund,” said Mitsushige Akino, senior executive officer at Ichiyoshi Asset Management Co. “The market is falling now and investors have zero visibility, so they are selling SoftBank stocks.”
Tony Zhang's Apple Options Trade
On CNBC's "Options Action," Tony Zhang suggested that investors should consider a bullish options strategy in Apple Inc. (NASDAQ: AAPL). He believes that the sell-off is going to be contained with the volatility we have seen over the past couple of days.
Zhang thinks Apple's chart is strong, relative to the market and to the tech sector and he thinks it has one of the strongest fundamental outlooks within the tech sector. The stock traded below its 20-day moving average, which Zhang sees as a bullish sign.
To make a bullish bet, Zhang wants to sell the October $115/$105 put spread for a credit of $4.15. The trade breaks even at $110.85 or around 8.5% below the closing price on Friday. If the stock stays above $115 at the October expiration, Zhang is going to collect the premium. If it trades to $105 or lower, the trade is going to reach its maximal loss of $5.85.
Zhang thinks Apple's chart is strong, relative to the market and to the tech sector and he thinks it has one of the strongest fundamental outlooks within the tech sector. The stock traded below its 20-day moving average, which Zhang sees as a bullish sign.
To make a bullish bet, Zhang wants to sell the October $115/$105 put spread for a credit of $4.15. The trade breaks even at $110.85 or around 8.5% below the closing price on Friday. If the stock stays above $115 at the October expiration, Zhang is going to collect the premium. If it trades to $105 or lower, the trade is going to reach its maximal loss of $5.85.