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Whale resurfaces as Facebook, Amazon see big bets in options market

Amazon.com, Facebook and Netflix were among companies that saw block trades of call contracts Thursday, representing speculation on movements in their shares through the first months of next year

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The identity of the buyer wasn’t known

Trades in which tens of millions of dollars were spent betting on the biggest American technology companies have again surfaced in the options market, weeks after the Japanese conglomerate Group was linked to similar wagers.

com, and Netflix were among companies that saw block trades of call contracts Thursday, representing speculation on movements in their shares through the first months of next year. Call options are bullish bets by themselves but can also be paired with other positions as part of a hedge.

The identity of the buyer wasn’t known. Analysts noted a resemblance to a series of wagers made by over the summer, which entailed billions of dollars of call purchases in tech stocks. Those “Nasdaq whale” wagers —combined with an explosion in buying by individuals and day traders in short-dated options — were theorised by some analysts to have created a bullish feedback loop that contributed to the August rally in the Nasdaq 100.

“The structure of the trades combined with the timing certainly has a lot of investors spe­culating the Nasdaq whale is back in the marketplace today,” said Chris Murphy, derivatives strategist at Susquehanna Financial Group LLP.

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A spokesman didn’t immediately respond to a request for comment.

Shares of all four companies rose Thursday amid a broad rally in the Nasdaq 100 Index.

Murphy said he saw evidence Thursday’s positions were part of a larger “delta-neutral” position in which underlying stock was sold in tandem with the call trading. The goal of such a strategy can vary, but is often a hedge against declines in the stock, he said.

The latest trades come amid another blistering stretch for technology stocks. The Nasd­aq 100 climbed 1.5 per cent Thursday, and has risen in seven of the last nine sessions, rallying almost 6 per cent over the span after falling into a correction earlier in September. The gauge is up 33 per cent in 2020, an annual return that would rank among the five best of the last two decades.

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First Published: Fri, October 02 2020. 23:58 IST
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