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Son Jeong-eui bets $ 4 billion on NASDAQ call options
Has it caused a sharp rise in the NASDAQ … “You’ve already seen a huge margin”
Softbank “Review of the change in investment strategy in derivatives”
They are Jeong-eui, president of Softbank. Photo = Hankyung DB
It was a week in which the global financial market fluctuated greatly when news broke of the investment of Son Jeong-eui, president of the SoftBank Group’s NASDAQ call option (an option to bet on an index rise).
According to the British Financial Times (FT) report of the fourth SoftBank buys $ 4 billion worth of shares in Amazon, Microsoft, Netflix, Tesla and Google starting this spring.Following one, NASDAQ call options bought worth $ 4 billion in the last monthIt is known that he did.
Due to the increase in technology stocks last week It is speculated that SoftBank’s large-scale option trading may have had an effect on the process of breaking the Nasdaq index above the 12,000 level for the first time in history and then sinking.He left. In response to this news, the NASDAQ adjustments are getting longer. The Nasdaq index closed this week at 10,853 without a solid rally.
President Son’s Softbank also evaporated more than 14 trillion won in market capitalization. As the fact of betting a large amount on the NASDAQ call became known, shareholder anxiety grew and can be interpreted as a liquidation phenomenon. Consequently, Softbank is reported to be considering changing its derivatives investment strategy on the 11th.
President Son Jeong-eui recently did not invest in Bitcoin, WeWork, Uber, etc.
Adam Newman, founder and former CEO of WeWork, caught up in the moral hazard controversy (photo = Reuters)
President Son is a third-year Korean-Japanese citizen who has become the richest man in Japan. It is considered one of the largest investment giants by establishing SoftBank with two employees and elevating it as one of the top three telecommunications companies in Japan, and investing $ 20 million (about 2.34 billion won) in Alibaba to early 2000s and make 2,500 times the earnings. The ‘Vision Fund’, which he manages, has become the world’s largest venture fund, with 100 trillion won in funds.
President Son has made a lot of money investing in a new IT company for a long time. However, its recent investment performance is not good. For example, in late 2017, President Son Investment loss of $ 130 million (about 154.3 billion won) in 2018 after investing a large amount of bitcoins as a personal assetIt was known that he had succeeded.
Additionally, WeWork, where Chairman Son invested over 14 trillion won through the Vision Fund, suffered a major crisis due to controversy over poor financial conditions and CEO moral hazard. It suffered an overvaluation controversy and posted a large loss.
1st quarter of this year Softbank Group lost 1.4381 trillion yen (about 16 trillion won)And the worst performance ever Influence of the 1.9 trillion yen (about 21.2286 million won) loss on Vision FundThis was great.
As a result, SoftBank appears to have shifted its investment strategy and has tried to leverage leverage from already publicly traded information technology (IT) giants like Amazon and Microsoft rather than start-ups. If SoftBank managed to sell its call option last week, it is estimated that it made a profit of around $ 3-4 billion on the call option alone.It’s possible. This is a gain that may offset some of the first quarter losses.
However, SoftBank shareholders are showing concern about the NASDAQ investment. Isn’t it possible that President Son has made an investment of unreasonable leverage to make up for losses caused by investment failures several times recently? SoftBank’s stock price, which plummeted around 8%, supports angry public investor sentiment. Some institutional investors have even been reported to have asked Softbank to reveal who is pushing high-risk investments.
Nasdaq short forces point to a time when the market turned shaky on the news from President Sohn
Photo = AP
With this news, the Nasdaq market was in decline. If President Sohn didn’t sell call options during this surge in tech stocks, the amount of option sales worth $ 4 billion may spill over.it is. With a $ 4 billion option, the impact on the spot market is at least tens of trillion won.
In addition, it is analyzed that short forces (groups that invested in positions that earn money when the index fell) came together in this gap, further intensifying the fall in prices. In a situation where market sentiment has become unstable due to the news from Chairman Son, the increase in sales volume will easily lead to an index collapse.Because you can.
The NASDAQ 100 index rose from the 10,800 level to 12,400 last month when Sohn focused on buying call options. On the other hand, when SoftBank’s purchase of Nasdaq call options went public, the Nasdaq 100 index fell 7% from the already high of 12,400 to 11,600. If the option did not sell at the peak, a significant portion of Son’s valuation earnings may have decreased.Exist.
In this case, if the selling force builds up and induces a temporary drop in the index, Chairman Son will have no choice but to close his position before losing money. However, trying to make a stop loss is not easy. Because he has a whopping $ 4 billion position.
If this amount is dropped on the market at the same time, it can cause a larger decline, leading to further losses. When the number of options sold increases, the spot market inevitably collapses, and the collapsed spot market induces option prices to fall again.This is the beginning.
It is also difficult to defend your current position by pumping in additional funds rather than stop losses. This is because it is a situation where you play while showing all the hands you already have. Due to the nature of President Son Jeong-eui and Softbank, who have been exposed to the media for a long time, it is easy to determine how many funds they have. If the liquidation price and available funds are inferred from President Son’s position and the sales volume spills over into a favorable spot, President Son can have a really tough fight.
From the point of view of short forces, there is no better prey than this. Even if President Son has already clarified his position, this news has created a favorable atmosphere in the market for short forces. This is the best time to drive the decline.
On the 5th, Softbank said: “We will continue to buy call options in the future” and promoted the consolidation of the forces of long positions (groups that invested in positions that profit when the index rises). However, according to a Bloomberg report on the 11th, Softbank is known to be considering a switch to a conservative investment strategy rather than a call option investment.
“President Son Jeong-eui must have already seen a huge profit”
Son Jeong-eui, President of Softbank / Photo = Yonhap News
There is a debate about Softbank’s investment in NASDAQ call options, but some The president’s son must have benefited enormously by nowAn analysis called. Even excluding the number of call options Since last spring, when the Nasdaq index reached its lowest point, it has bought $ 4 billion in cash stocks of Amazon, Microsoft, Netflix, Tesla and Google.This is because the market profit margin is significant.
There is also the view that there will be no reason for a veteran investor, President Son, to buy a call option worth nearly 5 trillion won in a highly valuated state, well beyond his previous high, and hold it. until maturity.
Chairman Son is someone who directly experienced the IT bubble in 2000 and saw SoftBank’s market capitalization shrink to one hundredth overnight. Recently, we have experienced the collapse of the price of Bitcoin and the collapse of the Silicon Valley bubble. This is how he could have bought $ 4 billion worth of call options at the peak of the bubble without any protection.
It is also speculated that the call option was sold. Foreign outlets like the Wall Street Journal (WSJ) in the US cited anonymous sources, and Softbank made a significant profit selling call options during the surge in tech stocks last week.Reported that.
Except for President Son and some of his aides, no one We don’t know how many options SoftBank has. Softbank discloses its shares to numerous shareholders, In principle, the options kept are strictly confidential.Because I’m doing it.
Did President Son manage to invest in Nasdaq call options? The success of your investment will be revealed in a future performance announcement. However, at least in the sense that he has become the first Asian to dominate the NASDAQ US market, he has already encountered a “main battle”.
Reporter Kim San-ha Hankyung.com [email protected]
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