Nasdaq futures are down sharply today, extending the rout in tech stocks. The rally before the reversal, it turns out, had a lot to do with outsize option bets made by SoftBank. The more investors learn about the Japanese conglomerate’s moves in the market, the more questions are raised — and the more fragile the recent run-up looks. A quick catch-up: SoftBank aggressively bought billions of dollars' worth of call options on tech stocks, essentially betting that those shares would keep rising. That forced firms that sold SoftBank those options to hedge their risks by buying the underlying stocks — and as those stocks kept rising, they had to keep buying to stay hedged.

Source: New York Times September 08, 2020 11:10 UTC