What's going on?

You�re gonna need a bigger boat: while Japanese tech giant SoftBank reportedly acted as a �whale� sending US tech stocks surging last month, a shoal of smaller investors may have made even more of a splash (tweet this).

What does this mean?

SoftBank�s snapped up billions of dollars� worth of call options on major tech stocks recently. These gave it the right to buy the shares a few months hence at predetermined prices � which will hopefully turn out to be lower than their market value by then. But the combined efforts of retail investors were likely a much bigger influence on Big Tech�s dramatic rise in August.


These small fry bought call options set to expire in a matter of weeks rather than months, forcing the �market makers� taking the other side of the bet to hedge their exposure. Those selling call options on, say, Apple shares risked handing the stock over at a large loss if retail investors� options came good. Rather than taking that risk, the market makers bought up Apple shares immediately after selling the call options � pushing their price up and in turn making those very same short-term options more valuable.

Why should I care?

The bigger picture: More than meets the eye.

Given its notoriety, SoftBank has naturally attracted attention for its tech stock option-buying. But their longer time frame suggests these options would�ve benefited more from an increase in the underlying shares� implied volatility than from rapid price rises alone � something which has a greater impact on the value of shorter-term options.

For markets: Can�t abide a Jonah.

SoftBank was reportedly on track to pocket $4 billion worth of profit from all this derivative trading. But its own shares were instead forced to swallow a 7% hit on Monday: last week�s tech selloff may actually end up denting SoftBank�s profit this quarter.