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The American technology exchange diver on Tuesday also weighed on Asian markets. According to market observers, among other things, market bets with options are responsible for strong price movements.
Tesla’s papers relinquished on Tuesday.
The renewed sell-off of tech stocks on Wall Street and the delay in the approval process for one of the major potential corona vaccines unsettled Asian investors on Wednesday. Pharmaceutical manufacturer AstraZeneca’s announcement to discontinue the late-stage study due to unexplained illness of a test person dropped out of courses.
In contrast, the Swiss stock market began a cautious recovery in early trading on Wednesday. However, investors are even more on the brakes, says a trader.
One of the reasons for this is falling prices on the American tech stock market. The high flights of the last weeks were punished. The Nasdaq Composite Heavy Technology Index had lost more than 5% last Thursday, as price weakness continued with less violence on Friday. On Tuesday, markets closed on Monday on Labor Day, the Nasdaq again fell 3.9%. The losers included stocks in Apple, Facebook, Amazon, Netflix, and Google’s parent company Alphabet.
The biggest loss was recorded by Tesla, which fell more than 21%. The electric carmaker announced Tuesday that the $ 5 billion capital increase announced last week was completed on September 4. The last share placements will be made on September 9, according to the company. On Friday, index trader S&P Dow Jones announced that Tesla shares would not be included in the S&P 500 index.
Investors are concerned about high option volumes
Market watchers also blame options market movements for diverging stocks in the tech industry. Selling relative to options remains a major driver of stock market development, writes, for example, leading bank UBS in its market commentary on Wednesday. With an option, an investor acquires the right to buy or sell a certain number of shares at a fixed price.
According to UBS, these financial products are moving the market for technology securities because the volume of options to acquire these shares has increased dramatically, that is, from five to ten times the previous level. According to the Financial Times, Softbank founder Masayoshi Son has acquired a large number of tech stock options and is said to have spent around $ 4 billion on his bid for price increases.
According to UBS, this massive wave of option buying pushed up the price of tech stocks. On the other hand, the risk of a sudden drop in prices also increased. Because if tech stocks were to end their rise, options sellers would be forced to sell their tech stocks as collateral. Prices would collapse. To anticipate this scenario, investors would already part ways with tech stocks.
