On Thursday Wall Street traders said that an unusual spike in call options shows that Japan’s Softbank may once again be betting on large tech stocks. Multiple sources told Faber that there was $200 million spent on Thursday morning on call options for Netflix, Amazon, Alphabet and Facebook, with the investment bank being the most likely buyer.
“A number of sources in the derivative markets on major trading markets noting that significant call buying, and they all point to Softbank as being behind it,” Faber said on “Squawk on the Street.”
Reports by the Financial Times, Wall Street Journal and other outlets identified Softbank as the Nasdaq “whale” whose massive options activity led to a boom for major tech stocks in August. The news led to a sell-off in Softbank’s stock in early September as investors worried about the new strategy for the bank and its CEO Masayoshi Son.
Call options allow the traders who hold the options to buy a stock at a predetermined strike price, with the bet being that the stock price will rise above the strike price. Unusually large call buying can lead to other traders buying the stock to cover their positions, driving the market price higher.