‘Nasdaq Whale’ Loomed after a Drastic Market Plunge Last Week
- 82newsbulletin
- Sep 18, 2020
- 2 min read
Written by Yang Runbang
Nasdaq, the most profitable stock market bouncing from the bottom in March at an unprecedented speed, retraced over 9% from the highest point through the past week. For usual investors, it is definitely thorny yet not dreadful to swallow; nevertheless, for Softbank’s CEO Masayoshi Son and his ‘Nasdaq whale’, Vision Fund, the judgement time has come.
Vision Fund, initiated by Sony several years ago in an aim of excavating privately held tech unicorns, kept losing massive amounts of money each year ever since its sensational birthday. Having again lost 19.9 billion dollars last business year, the managing team shifted heavily towards the secondary market and bet their last coin on Nasdaq -- which had been in a fevered bullish rally since March. To exercise this bet, they bought roughly 4 billion dollars of call options, indirectly forcing their counterparts to long equities for hedging; meanwhile, they longed around 2 billion in Amazon, Alphabet, Microsoft and Tesla. This strategy went well at the first place: Nasdaq kept hitting record high; however, just before the Exercise date, Nasdaq freefell. In light of the features of options, this plunge can at most cause a 100% loss on Vision Fund’s 40-billion options. According to Financial Times which first reported this heavily wounded whale, the exact amount of retracement of Vision Fund is still unknown, but one thing is for certain: ‘People are caught with their pants down, massively short. ’
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