
SoftBank unmasked as ‘Nasdaq whale’ that stoked tech rally - xoxoy
https://www.ft.com/content/75587aa6-1f1f-4e9d-b334-3ff866753fa2
======
synaesthesisx
This is hands down the most entertaining thing I’ve read today. SoftBank is
responsible for the spike in gamma across the board, dumping massive amounts
of money into OTM calls. Retail (WSB) speculators see unusual options flow,
end up piling in on calls and amplify the effect. Market makers are forced to
buy the underlying in order to delta hedge, and the price goes up even higher.
Rinse and repeat...the positive feedback loop continues and stocks actually
only go up.

The financial system is far more broken than people realize.

I’m guilty of taking advantage of this myself, but it’s basically been free
money for the last several months. Up until yesterday at least...

~~~
tarsinge
As an outside observer, I used to believe the stock market was solid and
mostly rational, and that obviously it could not be influenced by a single
actor or a subreddit community, contrary to a "playground" like the Bitcoin
market. I get the feeling everyone says they see the emperor's clothes in the
stock market reliability, anticipating everything, but in reality it's just
short term gambling and post rationalization.

Edit: punctuation

~~~
woeirua
The efficient market hypothesis is the biggest lie in modern history. Bubbles
don't happen in efficient markets.

~~~
Fordec
Research paper: Markets are efficient if and only if P=NP
[https://arxiv.org/abs/1002.2284](https://arxiv.org/abs/1002.2284)

~~~
MiroF
I am incredibly skeptical of the "iff" statement. How the hell could it be
possible that

P=NP -> Markets are efficient.

~~~
Fordec
Because if P=NP the vast array of the majority of known "hard" problem becomes
trivial to solve, not just market information. That's the reason P=NP is
considered so consequential to society in many ways if it does happen to be
true and implementable.

~~~
MiroF
But what about the "P=NP but nobody knows how to do it yet" case.

~~~
Fordec
Which implies that the markets, up to today, aren't efficient. Because nobody
knows how to do it yet.

~~~
MiroF
So then it appears it is possible that P = NP and markets are not efficient,
so it is not true that "Markets are efficient if and only if P=NP" because P =
NP !-> Markets are efficient

~~~
Fordec
For the markets to be efficient today they must calculate P=NP to achieve the
solution. Nobody has done that yet. Markets today are inefficient as nobody
has implemented P=NP to do the required calculation. Markets in the future
_could_ be efficient, but today's ones are not as we have to gauge market
value the traditional way with incomplete information and guesstimation and
modelling.

But the scientific consensus so far is heavily biased towards the presumption
that P!=NP.

~~~
MiroF
I think I understand the sketch of the proof and pretty familiar with the P=NP
debate. Perhaps my point is pedantic, and I've also looked at the paper and
seen that it doesn't try to prove an "iff" claim, but:

To prove an "iff" you have to prove that Markets are efficient -> P = NP _and_
P=NP -> Markets are efficient . I buy the first claim entirely, but not the
second.

Let's assume P really does = NP, but as you've said "nobody has done that
yet." Then, markets today _must_ be inefficient, but that is T -> F which is
impossible if P=NP -> Markets are efficient □

In lay words, how can it be true that `markets are efficient if and only if
P=NP`, if it is possible that `P=NP but markets aren't efficient`.

~~~
Fordec
I think we're on the same page, just different paragraphs. I _think_ I get the
gist of your line of reasoning.

Let me try an analogy for the if True case. Gravity (P=NP) exists, and always
has. But we didn't understand it a few hundreds of years ago. Before we
understood it, we didn't have interplanetary rockets (Efficient Markets). But
we do now, and they were never outright impossible before our understanding of
delta-v and other aspects. But before we had that understanding, we just
straight up didn't have rockets.

Meanwhile if hypothetically gravity was, perhaps stronger or more pervasive
over longer distances (P!=NP), it could have stopped interplanetary travel
altogether and we would have never have achieved it.

We are just in an equivalent time period to that time in the 1600s before we
understood, one way or another, what was ahead of us. If markets can be
efficient in the future, they could always have been now and in the past. We
just didn't have the tools to figure it out.

~~~
MiroF
Analogy seems roughly right, if it was a statement like "P=NP -> Markets could
possibly be efficient" then I'd buy it.

But I think what's more interesting is that

"Markets (present-day) are efficient -> P=NP" could plausibly be true,
suggesting that the contrapositive is true: "P!=NP -> Markets (present-day)
aren't efficient." Given current state of thought around plausibility of P=NP,
that seems pretty powerful nonetheless.

With the slightly stronger statement "Nobody currently possess a polynomial
time algorithm to solve a problem in NP -> Markets (present-day) aren't
efficient" it starts to become quite likely markets aren't fully efficient.

------
ramoz
Zero Hedge has been deemed controversial, but their reporting here is... wow.

[https://www.zerohedge.com/markets/one-day-after-zero-
hedge-f...](https://www.zerohedge.com/markets/one-day-after-zero-hedge-ft-
unmasks-softbank-call-buying-nasdaq-whale)

~~~
vajrabum
The reason for the controversy is there are indications that Zero Hedge may be
an outlet for a state level actor. See here for one perspective.
[https://newrepublic.com/article/156788/zero-hedge-russian-
tr...](https://newrepublic.com/article/156788/zero-hedge-russian-trojan-horse)

~~~
Natsu
> Zero Hedge may be an outlet for a state level actor.

So is the NPR and the BBC, so I'm not sure how much this means.

It's best to take what everyone says with a grain of salt and piece things
together from the evidence presented. I certainly don't believe everything
posted by any of the outlets.

ZH definitely plays more fast and loose with things, though.

~~~
dlp211
How is NPR an outlet for state level actors? Which state level actors?

~~~
Natsu
They're an arm of the US Government. If that's not a state, I don't know what
is.

~~~
nr2x
"While NPR does not receive any direct federal funding, it does receive a
small number of competitive grants from CPB and federal agencies like the
Department of Education and the Department of Commerce. This funding amounts
to approximately 2% of NPR's overall revenues."

[https://en.wikipedia.org/wiki/NPR#Funding](https://en.wikipedia.org/wiki/NPR#Funding)

~~~
Natsu
Other quotes from the same article:

"NPR differs from other non-profit membership media organizations, such as AP,
in that it was established by an act of Congress[2] and most of its member
stations are owned by government entities (often public universities)."

"Typically, NPR member stations receive funds through on-air pledge drives,
corporate underwriting, state and local governments, educational institutions,
and the federally funded Corporation for Public Broadcasting (CPB). In 2009,
member stations derived 6% of their revenue from federal, state and local
government funding, 10% of their revenue from CPB grants, and 14% of their
revenue from universities.[24][41]"

Depending on whether the universities are public or private, this accounts for
something approaching 30% of their budget.

So that 2% figure doesn't really give the full picture.

~~~
dlp211
Sure, and claiming that NPR is an arm of the state is disingenuous at best.

~~~
Natsu
You're shifting claims, originally we were just talking about whether it was
an "outlet for state level actors." It's deeply enmeshed with government
organizations at all levels.

Moreover, I've never said that was a bad thing, in fact I've argued against
it. There are plenty of these all over the world and I take what _everybody_
says with a grain of salt and look at the evidence presented rather than the
opinions given.

~~~
dlp211
Ok, it's still disingenuous to claim that it is an outlet for state level
actors.

~~~
Natsu
It publishes news from a US perspective, was founded by, and is deeply
enmeshed at all levels with the government, etc. If that's not an outlet for
the US Government and if the US Government is somehow not a state level
actor... then I don't know what those words even mean anymore.

------
kyle_morris_
[https://archive.is/h8zfx](https://archive.is/h8zfx)

 _SoftBank is the “Nasdaq whale” that has bought billions of dollars’ worth of
US equity derivatives in a move that stoked the fevered rally in big tech
stocks before a sharp pullback on Thursday, according to people familiar with
the matter._

------
simonpure
Matt Levine covered this same strategy back in February wrt WSB [0].

Too bad he's on paternity leave at the moment so we won't get his take this
time around.

[0]
[https://www.bloomberg.com/opinion/articles/2020-02-26/reddit...](https://www.bloomberg.com/opinion/articles/2020-02-26/reddit-
posters-pick-the-stocks-now)

~~~
runeks
From the article:

> When shares keep rising, managing the hedge entails buying more stock.

I don’t understand. If I sell a call option on a single share, I can hedge
this by buying a single share and not doing anything until the contract
expires, right?

~~~
ezzaf
Sure you could, but that's not how the dealers are (usually) operating. The
option is much cheaper than the stock, so when selling a call option you're
unlikely to have the entire position covered. From further down the article:

"Options are a way to get leverage, too, and can work sort of like an extreme
version of the margin loan. If you have $100, you can buy options on $1,000
worth of stock, and a dealer will go out and buy $500 worth of stock to hedge
that option."

The dealer doesn't own all of the stock they have sold you the option on. So
when the stock price goes up, their exposure goes up, and they have to buy
more stock to manage it.

If you're happy to own the entire position, why sell the call option?

------
guardiangod
Why do most posters here think SB lost money with this? They've definitely
_made_ money, a lot of it. I'd be damn if they didn't double or even triple.

The article claims SB started their moves in April ($4 billion in FAANG stocks
and another $4 in _call_ options) and continued up to last week. Even if SB
lost all of Aug's gains, they'd still come out ahead with the gains from
April-July. The retail investors poured in over $32 billion into the market in
the same span.

Now whether this is good old smart investment or blatant stock manipulation,
is a different story. Though I got a feeling Trump's DoJ will not exactly rush
to crack down on SB.

~~~
fataliss
Gotta fuel these flaky startup investments somehow! I always wondered how this
company was still alive despite terrible investment track record. I guess they
are at least good at financial engineering and market manipulations...

~~~
netsharc
Yeah, losing a few billion dollars (not sure how many they did lose) is not
that bad if you still have several billion dollars to manipulate things
with...

------
johnwheeler
This is so sad. Masayoshi Son is an ego investor trying to prove himself with
the likes of Warren Buffett by making massive bets in an industry he doesn't
understand. Coming off the WeWork debacle, he's gambling the money of others'
for the sake of his own reputation. Unlike Buffett, he's largely unproven and
using a far greater percentage of O.P.M. (Other peoples' money) than his own.

~~~
bitxbit
This right here is the answer. He couldn’t stomach his unicorn investments
going to zero. This gambit sort of worked but his real assets are still
illiquid. He’s still need to be able to exit them.

------
paulpauper
This is not the reason. As usual, hype and bad reporting from FT and
ZeroHedge. So when the market makes new highs again who will be blamed next?
Softbank again? It has to do with companies moving their workforce away from
the offices. It has to with amazon and Facebook being so dominant The usual
factors that are to blame for the past decade or so. It came fromzeorhedg.e go
figure.

it is not uncommon for surging stock prices to lead to implied volatility to
rise. The reason is, as the price goes up very steeply, the cross sectional
area becomes smaller so less volume is required to move the price a a lot
either way.

~~~
qeternity
This is absolutely the reason. Go look at AAPL skew. Skew doesn’t go negative
in response to strong underlying, it goes negative when you have a relentless
gamma bid. Go look at the massive volume in single name flows. It’s not the
only reason we rallied, but it’s the reason we went parabolic. Would NQs have
printed 12500 without SoftBank? Yes. But it wouldn’t have been so aggressive.

------
cs702
In summary:

1\. Softbank has been paying up to buy a mountain of call options on big cap
tech stocks.

2\. Lots of inexperienced traders have been piling on, buying those same call
options, e.g., on Robinhood.

3\. The brokers/hedge funds selling those call options have been hedging by...
buying big cap tech stocks.

4\. Passive funds have been mindlessly following along, "copying the market,"
getting more and more concentrated on big cap tech.

What happens if (i.e., when) 1, 2, and 3 unwind?

~~~
qeternity
1) Shorted dated options have lots of gamma which amplifies the effects of
this exponentially.

2) There are very few discretionary investors left, most are index funds. They
targeted a few names which have outsized influence on indices. This in turn
forces passives to buy those same names in order to keep tracking error low.
Which then amplifies the effects from point 1, giving SB pnl which they can
lever to repeat the cycle.

Source: hf head of quant trading

------
dharma1
[https://twitter.com/sentimentrader/status/130191483614261248...](https://twitter.com/sentimentrader/status/1301914836142612481)

"That FT article (following @zerohedge ) on Softbank suggests the fail whale
bought "billions" of call options.

The real story is that Softbank is dwarfed by retail traders, who spent $34
BILLION in call premiums in a month.

Unless Softbank cuts its orders into 10-lots, that is."

~~~
redisman
I wonder could it be possible that we're experiencing a new kind of bubble
caused by the confusing data from all the amateurs entering the market and
causing the ML algorithms to think that things are amazing. The real world
surely doesn't look amazing at the moment.

~~~
jachee
It's like an amateur poker player sitting down with WPT pros.

The pros don't know how to read the amateurs, who make nominally suboptimal
plays, and can be disrupted briefly.

All part of the market staying irrational.

~~~
pfraze
I once sat down to a $2/$4 limit poker game in Vegas. The limit was so low
that you knew a maxed pot was unlikely to ever bankrupt you. It’s meant to be
for amateurs without much cash for gambling (me).

Some guy at the table had figured out that with enough cash you can just max
every bet and let the odds dictate his results. Because other players were
folding based on the quality of their hand, they were missing opportunities to
hit on the river which he got. This devolved the game from reading your
opponent to reading the inherent odds of card hits.

It’s not the exact same game, but when I think about the market being
irrational, I think about that guy. He made the game inherently irrational.
EDIT: or, at least, he played it irrationally, causing the usual signals to be
removed from play.

The table beat him, but since he forced the game into playing the odds, the
only effective strategy was to play conservatively. There was no point in
trying to read his hand or bluff him.

~~~
TACIXAT
I was under the impression that reading hands was amateur. You should be
playing the expected value of hands. If you do that you will fold often but
get huge payouts from that guy when you have something playable.

~~~
pfraze
You want to do both. If you only play good hands then other players will fold
any time you play.

------
iamsanteri
Funny to read the comments here and how people debate and wonder what could be
the causes of stock markets rallying.

There has been speculation that Fed is aiding foreign central banks (like the
Swiss central bank) in buying US stocks such as Apple and others... When
central banks can print money in an unlimited manner (with no real risk) and
buy real securities like stocks, the prices keep going up...

Quantitative easing (QE) at its best without Fed taking full responsibility
with what can eventually happen.

Robinhood and other trading apps for the consumer are just small sparks
contributing to the growing fire...

------
Radle
That's a surprise. I thought markets are to big for a single actor to make
such moves.

~~~
Guest42
I think the analysis is so granular (and sometimes desperate for signal) that
individual movers can have plenty of influence.

Also, the volume of non-retail trades is low which amplifies larger trades.

(My theories at least)

~~~
MiroF
> Also, the volume of non-retail trades is low which amplifies larger trades.

Source? I thought most volume was non-retail.

~~~
Guest42
Lower than usual. I should’ve been more specific.

------
FiReaNG3L
Stock market feels like a big whole gambling machine at the moment, between QE
and manipulation of this sort...

~~~
lotsofpulp
I feel the opposite. US politicians across both parties have an incentive to
keep the market indices going up and to the right. And so it will since
politicians have control of the money supply.

~~~
duxup
" US politicians across both parties have an incentive to keep the market
indices going up and to the right"

Isn't that always the case?

And does it make a difference?

I feel like we see plenty of situations where politicians would not want to
see the market crash, it still does...

I don't doubt politics plays a part, but I'm not at all sure they've got
switches that work exactly as desired all the time either...

~~~
lotsofpulp
If your time horizon is more than a couple years, then it has worked. They
have the ability to create money and purchase bonds, equity, and simply give
companies cash if needed. And they have. The biggest variable they don’t have
control over is the best value or expected future value is the USD.

Also, the invested-ness of US politicians is not just due to them owning
stocks, but due to the people voting for them being invested in them by way of
invested retirement funds and indirect exposure via government employee
pensions.

~~~
duxup
>Also, the invested-ness of US politicians is not just due to them owning
stocks, but due to the people voting for them being invested in them by way of
invested retirement funds and indirect exposure via government employee
pensions.

That's also a permanent thing ...

------
disown
I'd be interested in proof/data (if it is even possible) rather than "some
investment banker claims", etc.

The finance industry is huge and even softbank with their $100 billion is a
tiny player in the market especially one as large and liquid as the nasdaq.

What about the nasdaq rally from 2009 to 2020? What that softbank as well?

The world flush with cheap capital, money flooding to the US because of
tensions around the world, election year rally, etc seem far more plausible
cause than softbank.

Softbank by itself isn't remotely big enough to move markets for such a long
period of time to set a trend.

~~~
christophilus
The analysis covers that. The idea is that options magnified the effect of
their billions and set off a chain reaction. When you analyze the flows, they
are anomalous. It may not be the reason, but it’s plausible and worth further
investigation.

------
iammru
They're acting like teenagers with a Robinhood account. I get they lost a lot
of money but this looks like a hail mary attempt to recover from their bad
investments.

~~~
itsoktocry
> _from their bad investments._

Do they have any good investments?

They were heavy into WeWork and WireCard. They have about $10 billion into
Uber. Lots of small oddballs like investing in Wag at $300MM valuation. Lost a
bunch buying bitcoin at the peak. Now this.

~~~
iav
Unlike VC funds, SoftBank releases full accounting of the Vision fund
quarterly, so this question is entirely answered here:
[https://group.softbank/system/files/pdf/ir/presentations/202...](https://group.softbank/system/files/pdf/ir/presentations/2020/investor-
svf_q1fy2020_01_en.pdf)

They had 6 full exits generating $5B of gains, plus another dozen companies
went public and the mark to market on the whole is a $3B gain. I don’t see
that they’ve ever invested in Bitcoin. The remaining portfolio is down about
$5B on $60B invested - I have a lot of questions about how they are marking
those securities, but surely it’s similar to the VC model of “Mark to the last
third party investment, even if we led the investment, unless something really
bad happened”. That’s where the WAG and WeWork losses would be. So all in they
still think they are in the black by $3B on $80B invested. Even if they are
mis marking the private book by 20%, the fund would generate a 0.9x return or
disappointing but not a complete disaster.

~~~
itsoktocry
> _I don’t see that they’ve ever invested in Bitcoin._

Apparently it was a personal investment:

[https://www.cnbc.com/2019/04/23/masayoshi-son-invested-in-
bi...](https://www.cnbc.com/2019/04/23/masayoshi-son-invested-in-bitcoin-and-
reportedly-lost-130-million.html)

> _the fund would generate a 0.9x return or disappointing but not a complete
> disaster._

Definitely disappointing, with a nearly exclusive biotech/tech portfolio
during once of the biggest tech bull runs ever.

~~~
iav
True, and if I recall Apple is even a “small” LP in the Vision Fund. So Tim
Cook could have bought his own stock but instead thought giving a few billion
to Masa was a better trade! But hindsight is 20/20 and we don’t know what the
fund is ultimately going to return. I have friends who work there - the sad
part is the amount of sheer work that had to be done to keep the returns where
they are today, restructuring old investments and squeezing every drop from
the winners to make up for the total write offs.

------
twblalock
And the index funds followed right along. Perhaps index funds, by blindly
following market trends, amplify bad actors' ability to distort the market.

Of course, retail investors followed slavishly along too. So this isn't merely
a problem with index funds.

Also, all that said, tech stock prices today are still way up compared to when
Softbank started buying options back in April.

~~~
MiroF
> And the index funds followed right along. Perhaps index funds, by blindly
> following market trends, amplify bad actors' ability to distort the market.

Well of course index funds follow market trends. How is that at all
surprising? They are literally _index funds_.

~~~
twblalock
The point is that blindly following market trends, when the market is being
manipulated, is not a good thing. Yet it's a core feature of index funds. It's
a big potential downside of index funds.

In general, the standard retirement investing advice these days is to invest
in a portfolio of index funds -- don't bother with active funds, and don't
pick individual stocks! People who take that advice probably expect that they
are investing in a slice of ownership in companies that will grow over time,
not that they are enabling/following along with market manipulation and being
suckered into buying overvalued assets. It makes index funds a lot less
attractive as a safe investment for normal people.

~~~
MiroF
I mean, competitive, publicly traded markets like the stocks underling SPY are
not manipulated long-term.

Index fund investors are not being "suckered." People who get convinced that
they can time the market or pay someone else to time the market are the ones
who are "suckered."

> index funds a lot less attractive as a safe investment for normal people

As long as you aren't day trading, I don't see why this volatility ought to
even be a concern for normal people. I'm not buying/selling based on 5% shifts
in the market on a day-to-day basis.

------
neonate
[https://archive.is/jnChJ](https://archive.is/jnChJ)

------
jeffreyrogers
SoftBank seems to have an uncanny ability to lose money. Just taking the
opposite position of SoftBank would probably get you a pretty good return. (I
realize that's not possible since a lot of their investments are in the
private markets).

~~~
xmprt
If you bought puts for the last few months then you probably lost a lot of
money. I don't think inversing them would actually work.

~~~
oh_sigh
The opposite of a call is a neutral or short position, not just a short
position.

~~~
raincom
Ah, a logical answer. Short, long, neutral are contraries.

------
jrg123
This is market manipulation.

It is an example of pump and dump: a market participant creates a position for
the purpose of inducing other participants to join them before selling once
the price moves in the direction of their position. What makes it unusual is
both the size and time scale of the manipulation.

Typical examples of this are seen in illiquid stocks for a few thousand USD at
a time, with time ranges from hours to days.

It is frowned upon by regulators because it increases volatility in the
markets that are disconnected from fundamentals.

------
logicslave
Hard to imagine what their end goal for this could have been

~~~
gwd
Money laundering / plausibly deniable embezzlement?

1\. Inform people to whom you want to transfer money that you're about to push
the market up. They buy a wide range of tech stocks (or other derivatives that
rely on tech stocks)

2\. Make some insane trades that push up tech stocks for a few days

3\. Your targets sell, taking a hefty profit

You've effectively transferred money out of your hedge fund to these other
people; if the "area of effect" is large enough, it should be difficult to
tell who was the target. Don't know if this is efficient or plausible.

~~~
srtjstjsj
If it's that easy, just do it for yourself to profit.

~~~
dllthomas
I doubt gwd has access to a tremendous pile of other people's money to
experiment with, other considerations aside.

------
fakedang
I'm surprised it took so long to find out that SoftBank was a whale. When
Buffett makes a move, usually the market catches on pretty fast.

~~~
toss1
This is largely due to required SEC filings such as 10Q [1] and 13F [2]
reports, etc.

The 13F shows the list of stocks they own, down to the share. Successive
reports will show bought/sold differences, but this is only a rear-view-mirror
view, after the quarter is over, so the actual buy/sell may have been almost 4
months prior

[1]
[https://www.berkshirehathaway.com/qtrly/2ndqtr20.pdf](https://www.berkshirehathaway.com/qtrly/2ndqtr20.pdf)
[2]
[https://sec.report/Document/0000950123-20-005345/](https://sec.report/Document/0000950123-20-005345/)

~~~
fakedang
But that's expected, except in Buffett's case, you get his positions on the
next day itself due to the filing.

I wonder if it's because SoftBank is a foreign entity, hence only required to
report quarterly results optionally.

------
xwdv
So what happens next? I unloaded a bunch of tech positions yesterday and am
wondering what to do with all the dry powder.

~~~
marktangotango
I'm hoping for a further pull back and oppurtunity to buy. I did not deploy
all the capital I would have liked in March/April. Market came back way
stronger and quicker than I expected. And the "dead cat bounce" didn't happen,
seems we know why now!

------
cced
Can some ELI5 what this means? Is this the explanation for why the markets
have been exploding in such turbulent times?

~~~
ryanbberger
The short answer: yes, this is partially the reason.

Options trading is making a bet that a stock will go up or down. To accomplish
this, you buy the rights to sell/buy stock at a given stock price (we call
this a strike price). You do not OWN the stock, you borrow it, with the
guarantee you can exercise your right to the buy/sell the stock once it hits
the strike price.

When you trade options, you typically don't buy the right to buy/sell
individual stocks, you buy the right to sell 100 at a time. This means if
Softbank buys 4bil in options in companies, they now have the risk/reward of
400bil in the market. In order to give Softbank the rights to the stock if
they were to exercise their options, banks must back those options with
shares. You may see where this is going. By making 4bil in options orders,
Softbank has caused banks to be forced to buy 400bil in stocks, pumping the
price.

TLDR; Softbank forced banks to buy 400bil in stocks, effectively pumping the
market

~~~
smabie
This isn't correct. Option prices are quoted as the price for one share, but
you have to pay 100x.

The leverage you get from options is the difference between the price of the
option and the price of the stock. The total value of the stocks you have the
right to buy or sell is called the notational value.

Your multiply by a 100 thing isn't at all how this works.

------
bitxbit
Not really true considering that moves were tied to very short-dated OTM calls
starting late April. I don’t think even Softbank is that irresponsible.
Regardless, we’ll likely see another market crash before election. Stay tuned.

------
jennyyang
How is this legal? If they are buying options to force the markets to rise
like this, isn't this blatant market manipulation? Or is this okay because
they have a lot of money?

~~~
pfortuny
Do they have inside information? If not, they can buy and sell without having
to have a specific intent.

~~~
jennyyang
Inside information doesn't have anything to do with market manipulation. The
trader who caused the Flash Crash in 2010 was similarly prosecuted for
artificially manipulating the markets. If Softbank was buying options to
somehow manipulate the rest of their trades, I can't see how this isn't
illegal.

~~~
raincom
2010 flash crash was due to spoofing. Here SB bought call options outright.
Nothing illegal about that.

------
trhway
cool, so using $2B i buy TSLA and using another $2B i buy a planet scale
truckload of TSLA $10K calls, and the MMs would buy at least some shares to
hedge it - and even some small percentage of that planet scale truckload
number is really a large number of shares thus moving the stock high, which in
turn increases the MMs' risks associated with the calls, and forces the MMs to
buy even more shares to cover that increased risk which naturally drives the
price even higher - positive feedback loop! - and now i dump the TSLA i have.
Even without the herd of retail and passives amplifying the effect, it is
already a wonderful play... Yep, it is great to be a big guy, ie. to have
those $Bs to play at that scale. Though i wonder whether it falls under market
manipulation and thus prohibited.

~~~
marketgod
With TSLA it may not work so well because TSLA has had a high short interest
rate historically. So actually, after the split, if we see more shorts come in
to drive TSLA down, we may get another substantial move up, hence I have $1000
targets for December.

~~~
brandmeyer
Some fraction of the short interest will choose to cut their losses on the way
up. Since that is yet another entry on the buy side of the books, that would
act to drive prices up even higher, no?

~~~
marketgod
The short interest has really gone down for TSLA significantly. It was double
what it is now so I don't think short covering should push the market up, I'd
presume the people who think Tesla is a fraud are going to get back in now as
it is cheaper and maybe even look for a $240 target to add more shorts.

------
pestkranker
Paywalled.

~~~
speeder
Risky solution of the day but... [https://www.zerohedge.com/markets/one-day-
after-zero-hedge-f...](https://www.zerohedge.com/markets/one-day-after-zero-
hedge-ft-unmasks-softbank-call-buying-nasdaq-whale)

~~~
seemack
Anyone familiar with zerohedge?

I'm not going to make any real judgements but they certainly don't make a good
first impression. They repeatedly claim that they reported this a day earlier
than FT but don't even provide a link to this supposed report, spelling
mistakes throughout...

They do make it more tempting to pay for FT though!

~~~
processing
[https://www.zerohedge.com/markets/speculation-emerges-
over-i...](https://www.zerohedge.com/markets/speculation-emerges-over-
identity-mystery-marketwide-call-buyer)

~~~
seemack
Thank you!

------
mgh2
Is there a non-paywalled version of this article?

~~~
mgh2
[https://financialpost.com/financial-times/softbank-
unmasked-...](https://financialpost.com/financial-times/softbank-unmasked-as-
nasdaq-whale-that-stoked-tech-rally-before-selloff)

------
KKKKkkkk1
The vibe I'm getting from the FT and the WSJ is that SoftBank and Masayoshi
Son are colossal idiots. That was the case since the WeWork IPO and even
earlier (when the story about SoftBank funding competing startups came out).
Does this mean that SoftBank is much worse than the rest of the finance
industry? Or is it simply because they're based in Tokyo and don't have a PR
team in New York and London that's as strong as their competitors?

~~~
fspeech
Softbank is not financial neophyte for sure. See their long term option deal
with Citi to sell their Yahoo stake a decade ago. Their investment in BABA is
probably the most successful passive investment ever. But they are very
aggressive so will also have a lot of failures. I get the feeling that they
tried too hard to replicate their BABA success.

~~~
chii
their BABA success is due to luck, but they won't admit it, and instead
attempt to replicate it with "skill". This is what happens to people who
aren't humble enough to know their success wasn't really due to their own
abilities.

------
dionian
I dont trust news sources that aren't deemed controversial, these days.

~~~
Proziam
I'm struggling to bring to mind a 'reputable' source that I haven't caught in
some heinous misinformation in the past couple of years. Potentially worse is
that social media companies are censoring opinions they disagree with.

I am genuinely concerned about how people will stay informed in the future.

~~~
pstuart
That misinformation comes in different flavors. The NYT's reporting on "WMD"
to legitimize the Iraq Invasion is a stain on their reputation, but I still
consider them to be "as reliable as one could hope for".

That vs. Fox News, which was designed from the start as arm of the GOP and is
a fount of _intentional_ misinformation.

I think the path forward is curated collections of sources with trusted
reviewers.

Edit: defenders can question my assertion of intention regarding Fox News, but
its origin and goals are indisputable:

[https://www.businessinsider.com/roger-ailes-blueprint-fox-
ne...](https://www.businessinsider.com/roger-ailes-blueprint-fox-news-2011-6)

~~~
P-ala-din
Another stain on NYT's history is this:
[https://skeptics.stackexchange.com/questions/43144/did-an-
un...](https://skeptics.stackexchange.com/questions/43144/did-an-unmarried-
couple-in-iran-get-shot-for-holding-hands-in-2007)

~~~
pstuart
There's plenty more for sure :-)

I don't trust _any_ source to be 100% accurate, but I prefer those that
ostensibly _try_ to be so.

