Softbank Bets Heavily On Option Purchases, Primarily In Tech Sector

Softbank Bets Heavily On Option Purchases, Primarily In Tech Sector”

It has been under pressure from hedge fund Elliott Management to use this cash to pay down debt and buy back shares, after its attempt to raise a second $100 billion Vision Fund struggled because of the lukewarm investment performance of its predecessor and faltering bets. However, when the prices tend to fall the puts rise.

SoftBank bought a roughly equal amount of call options tied to the shares it bought, according to the Wall Street Journal. Softbank is known as an aggressive player in the tech startup business, but not so known for investing large amounts of funds in the biggest tech stocks in the world, such as Apple, Alphabet, Microsoft, etc.

It looked at some of the elders like a conjecture mania.

The Financial Times and the Wall Street Journal today reported that SoftBank has purchased billions of dollars' worth of options tied to the shares of publicly traded tech companies. It has also spent more buying derivatives in US stocks, the sources said.

Reuters could not immediately determine what options strategy, or combination of put options and call options, SoftBank used.

The Japanese conglomerate's recent stock market bet reportedly saw it buy a large batch of so-called call options. A lot of the call buying was an upward lift to the market. Retail investors, such as online platforms such as Robinhood Trading - Commission Free - have also embraced a record number of options trading and chased the name of big technology.

More news: Renault to be rebranded as Alpine for 2021

"The apparent growth of small retail investors and the growth in options-related trade". This has contributed to the speculative nature of the market in recent weeks, "said Chris Igo, chief investment officer at AXA Investment Advisors".

What does such solitary activity mean for a wider market?

Raymond James market strategist Ellis Phifer said the buying by SoftBank would have helped push up shares of tech companies in recent months, although the stocks were benefiting from other trends.

The alternative market activity is linked to the stock market.

Softbank sold the call options at a higher price, according to The Journal's report. These dealers, which include large banks such as Goldman Sachs, JPMorgan and Morgan Stanley, and expert marketers like Citadel Securities, are appealing to call options holders to pay if share prices rise, and those options have proved to be profitable. As those calls were bought, it forced the counterparties to hedge via buying the underlying, sending shares ever-higher. Their purchase, in turn, pushes the underlying stock and creates a self-fulfilling prophecy that helped push Tesla and Apple to an all-time high this week. During the most recent stock market rally, Apple's market cap increased by nearly $700 billion. Typically, such volatility measures are minimized when the market rises.

Like this



06 September 2020
Virgin Atlantic Plans 1,150 More Job Cuts After Completing Rescue Deal
Talks had started with the pilots union BALPA and Unite, which represents ground and air crew, the company said on Friday. Virgin Atlantic does not foresee a return to pre-crisis levels of flying until 2023.

06 September 2020
Coveted free agent Jadeveon Clowney to sign with Tennessee Titans
Clowney, 27, suffered a core muscle injury in Week 10 last season and elected to postpone surgery until the offseason. Vrabel and the Titans reached the AFC championship game in 2019 and lost to eventual champions Kansas City Chiefs .

06 September 2020
Italian GP: Pierre Gasly wins for AlphaTauri after Lewis Hamilton penalty
He, along with all the leaders, pitted during the first safety-car period, triggered by a breakdown for Kevin Magnussen's Haas. Racing Point's Lance Stroll was third for his second career podium, with Lando Norris fourth in the second McLaren .

06 September 2020
One dead, several injured after stabbings in Birmingham
Police have labeled the attack a " major incident ", but said it was too early "to speculate on the causes of the incident". Several yellow police evidence markers could also be seen on the ground, some near to broken glass.

06 September 2020
Oil Tanker Fire Near Sri Lanka Coast "Under Control", Vessel Towed Away
Sri Lankan officials have warned of possible massive environmental damage to Sri Lanka if the ship leaks or explodes. An additional five Sri Lankan coast guard ships and gun boats are supplying the others vessels.

06 September 2020
Authentic Outduels Tiz the Law in the Kentucky Derby
It marked the third time in the history that the Run for the Roses has been held outside of May and first time since 1945. There will be 16 horses in the field. "He's in an ambulance", Baffert said as tears welled in his eyes.

06 September 2020
Things We Learnt From Miley Cyrus's Joe Rogan Podcast Interview
While Miley moved on with Kaitlynn Carter and eventually dated Cody Simpson , Liam found love in model Gabriella Brooks. I've bought cash and I've bought all of the issues I have to deal with myself. "I am firm about what I want".

06 September 2020
Donny Van De Beek Was Wanted By Six Clubs
Murphy would've liked United to have signed a more defensive-minded player, but calls Van De Beek "very good". It's like them going for Jadon Sancho. 'It makes no sense to me. "Now they won't get a game", Merson added.

06 September 2020
Honor unveils a rugged Apple Watch rival with 25-day battery life
These will be available in Europe within the next month at 750 euros for the MagicBook 14 and 700 euros for the MagicBook 15. As for availability, both smartwatches will be available starting September 7 in the UK, France, Germany, Italy, and Spain.

06 September 2020
Adds 15,300 jobs in August as pandemic recovery continues
Sudbury's economy picked up steam in August, adding 1,200 jobs, according to numbers Statistics Canada released on Friday. In February - before a state of emergency was declared in the province - B.C.'s unemployment rate was five per cent.