Softbank is now very very bearish. It's one bank vs all the MMs he forced to buy up stock. Softbank also sold many calls above current ATH, meaning if price were to return there, a gorgeous spike would follow. Perhaps you can show me why my logic is incorrect?
"Softbank is now very very bearish. It's one bank vs all the MMs he forced to buy up stock" For starters, SOFTBANK is NOT a Bank... https://en.wikipedia.org/wiki/SoftBank_Group
Likely a single (consolidated) risk desk though, which would mean they will act in unison. MMs have different & even contradictory risk desks, meaning hard to squeeze.
Help me understand this dest. I hear you but I don't hear you. Softbank's mkt cap is >100B, I need to find their latest quarterly but I figure they aren't short on cash. The numbers being thrown around were what 1B in OTM calls? Hardly a margin call even if they expire worthless.
Yes... I do recall seeing this quote in another thread We've been discussing the chunkiness of the MTM and how it's being gamed. I went out yesterday with a MTM on my GOOGL position that was a solid 2 handles under a realistic vol mark and is now 3-4 over. So the mkt is buying var (wings) and the sell side is marking it down at the close. I've never seen anything like it in an orderly market.
I am afraid Softbank already took half of their profit and rolled the half to further OTM call. Will MM be able to take him down?
https://www.usa-vision.com/softbank...gains-on-masayoshi-sons-us-stock-options-bet/ SoftBank sits on $4bn trading gains on Masayoshi Son’s US stock options bet usavision_7b4gc0 Send an email1 hour ago 0 8 2 minutes read FacebookTwitterLinkedInTumblrPinterestRedditVKontakteOdnoklassnikiPocket SoftBank is sitting on trading gains of around $ 4 billion after founder Masayoshi Son made aggressive bets on equity derivatives that helped propel the US stock market to record highs, people said having direct knowledge of the subject. the high risk strategy has been built over the past few months, these people said, with the Japanese conglomerate spending around $ 4 billion on technology stock-focused options premiums during that time. Aside from a sharp pullback in the stock markets at the end of last week, the huge derivative bet on some US stocks has worked so far, leaving SoftBank with sizable but unrealized profits. However, a continued decline in the United States stock Exchange could eat away at SoftBank’s returns. SoftBank’s bets were made on the instruction of Mr. Son, who lost $ 70 billion in the dotcom crash. The strategy focused on options linked to individual US tech stocks. In total, he took a notional exposure of around $ 30 billion using call options – bets on rising stock prices that give the right to buy stocks at a predefined price on future dates. . Part of this position was offset by other contracts purchased as hedge. The trades have been deeply controversial even within SoftBank, according to people familiar with the discussions. Critics of the strategy say the group is better able to seek returns from complex structured investments such as the one orchestrated at Wirecard last year, which protected against losses even when the German company collapsed. “It’s just a leveraged punt in the market,” said one person with first-hand knowledge of the trades. “The whole strategy is just a dynamic buy.” SoftBank declined to comment. Stock markets have sailed higher since SoftBank started buying these options, thanks to very low interest rates and in part also a growing boom in retail investment, especially in technology stocks such as You’re here. The strategy focused on individual US stocks resulted in a smaller market than options linked to larger stock indices. The aggregate face value of calls traded on individual U.S. stocks has hit an all-time high in the past two weeks, averaging $ 335 billion per day, according to Goldman Sachs, more than triple the moving average between 2017 and 2019. The investments are the latest twist in a strategic reversal by Mr Son since March, when global markets collapsed due to the impact of the coronavirus pandemic. SoftBank’s shares collapsed at the time, putting the company and Mr. Son, who borrowed huge sums against his shares in the company, in severe distress. Since then, SoftBank moved to relax huge portions of its portfolio, selling stakes in Chinese e-commerce group Alibaba, T-Mobile US and its Japanese telecommunications businesses. The cash generated by these products was used to buy back shares and repay its heavy debt. The divestitures helped push SoftBank’s shares to a 20-year high. But the cash raised was also used to launch a new betting strategy on publicly traded tech stocks, marking a break with Mr. Son’s previous focus of betting on private companies through the Vision Fund. Additional reporting by Leo Lewis
You don't need to be margin called to get squeezed. Losing a bet which has probably been touted fairly well inside the company would put enough pressure for the company risk desk to disavow the trade and require covering the sold options before they became too dear.
I'm a little busy atm. For real though, I would certainly love to see @Same Lazy Element 's take on this if he happens to drop in. He'll know what's what.