FAANG Stocks pumped by OTM Calls bought by Softbank!!

Background: sorry, it’s ZeroHedge again. Not reliable as a source, so caveat lector.

There is a constellation of things happening here:

• retail investors suddenly discovering they can buy calls as lottery tickets that pay out surprisingly often,
• FAANG stocks where the management are continuously draining the free float via buybacks (to prevent the dilution that would otherwise occur if the senior management exercised their options),
• Long-only passive funds that are obliged to keep buying big tech names whenever money is moved from active to passive management,
• compliance officers on the backs of the traders writing calls to “reduce” their risk by buying the tightly-held underlying because they don’t want to have a fail if the tail risk is realized and the have to deliver,
• no sane active manager having any discretionary holding of FAANG stocks because they represent just terrible value,
• dark pools, high-frequency trading and highly opaque trading for cash & derivatives,
• brokers getting nervous.

I don’t know if all were at play, but the “gamma squeeze” that pushed up $AAPL and co. was an amazing thing. Someone, somewhere understands the plumbing of this market better than I do. Akshay Naheta is supposedly the name in the frame, according to ZH, but I somehow doubt that he is the genius behind all this. Whoever it is deserves to be rich, but now the cat is out of the bag, the bagholders will have to carry the can.