SoftBank Unmasked As 'Nasdaq Whale' That Stoked Tech Rally

An anonymous reader quotes a report from CNBC: Japan's SoftBank was reportedly the "Nasdaq whale," that bought billions of dollars in individual stock options in big tech companies over the past month, driving up volumes and contributing to a trading frenzy. Softbank declined comment on a Financial Times story that quoted unnamed sources who said it was buying equity derivatives on a massive scale. Rumors had circulated in the market that there were large players behind the frenzied activity in the options market for big tech and internet stocks, and SoftBank was one named mentioned in connection with extreme volumes in some out-of-the-money calls.

According to the Wall Street Journal, SoftBank had made regulatory filings showing it bought nearly $4 billion in shares of Amazon, Microsoft, and Netflix, plus a stake in Tesla. The paper quoted a source saying that SoftBank spent roughly $4 billion buying call options tied to its stock holdings, but also in other names. It then could profit from the run up in stocks and subsequently unload its position to other parties. SoftBank was trading in names that are among the key drivers of the stock market. Apple, Amazon , Microsoft, Facebook and Google equal about a quarter of the S&P 500, and they have been drivers of a big chunk of its gains. One options trader explained that those names can be proxies for the market, and can be hedged against the S&P 500 and vice versa. The options market activity was credited by analysts for adding froth to the stock market itself. Some of that is now reversing.

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