In a stark reminder of the market excesses reached last week, Goldman writes that the Nasdaq had one of the largest 2-day declines in the last 30 years after the SoftBank gamma trade was exposed.
Meanwhile, the sheer buying frenzy into this plunge was unprecedented, and was characterized by a significant increase in options positioning into US equity and US Tech in particular, with the put/call ratio in the US reaching a historical low, the single stock skew back to pre-Covid levels and the spot-vol correlation turned into positive territory. “Such stretched option positioning has historically highlighted a negative asymmetry of near-term equity returns”, Goldman writes, pointing out that Nasdaq net equity future positioning at the peak was close to historical highs. Read more…..
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SoftBank Group Corp. shares tumbled in Tokyo after reports that the Japanese conglomerate made substantial bets on equity derivatives amid the surge in technology stocks, touching off concerns that billionaire founder Masayoshi Son is embarking on a risky endeavor in unfamiliar territory. Dani Burger reports on “Bloomberg Daybreak: Europe.”