Wrapped up
in Thursday’s fourth-largest daily point drop in Nasdaq history, and
yesterday’s grim-but-not-as-grim second act, is a series of intriguing
storylines.
Green traders get battle scars
The rash of
inexperienced individual investors getting involved in risky options
trading has been a consistent theme during the market’s epic rally. And
vets who preached caution are finally getting their “told you so”
moment. With $730 billion worth of value erased from the Nasdaq on Thursday, lots of poorly timed options contracts were wiped out.
Insiders have been selling
U.S. executives sold $6.7 billion worth of their own companies’ stock in August. If that sounds like a lot, it is.
- Last month’s garage sale
was the largest monthly tally since November 2015, while the number of
execs cashing out was the highest in two years, according to the FT.
Selling
activity like this paints a less-than-optimistic picture for the future,
but who can blame insiders for “harvesting a once-in-a-millennium
bonanza,” macro strategist Vincent Deluard told the FT.
SoftBank flies too close to the Son
Never one to
miss out on massive trades with extreme risk, the Japanese tech
conglomerate led by Masayoshi Son has been revealed as the “Nasdaq whale”
that’s been snapping up an astonishing amount of options tied to Big
Tech companies. In addition to buying nearly $4 billion worth of shares
in the likes of Amazon, Apple, and Netflix, SoftBank reportedly spent
another $4 billion purchasing bullish call options that would pay off bigtime if those stocks hit a certain level in the future.
Some investors say SoftBank's activity may have been partly responsible for the recent surge in Big Tech stocks.
-
Flashback: Now might be a good time to remember Son lost over $130 million of his own money after getting into bitcoin around its peak in 2017.
Bottom line: Most
analysts say not to read too much into the recent sell-off, given the
Fed's pledge to support markets with liquidity and the ongoing economic
recovery.
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