Technology may have made a rebound during Wednesday’s trading session, but the sector no longer held the invincibility it seemingly had following March’s Covid-19 sell-offs. Japanese holdings company Softbank found that out the hard way with some massive bets that CNBC’s “Mad Money” host Jim Cramer derided as “amateur” moves.
Founder and Softbank CEO Masayoshi Son was front and center in these large tech positions, which consisted of options. As such, the Nasdaq has been hitting new highs—fueled by heavyweights like Amazon and Zoom, which have been benefitting from the heavy reliance on tech as a result of Covid-19.
The bold maneuver appears to be working out this far as tech heated up during the summer amid more uncertainty regarding the pandemic.
“The Japanese-Korean maverick investor Masayoshi Son has reportedly been buying billions of dollars in derivatives linked to U.S. tech stocks, perpetuating this summer’s ‘melt-up’ in the market,” wrote Alex McMillan in a Real Money article. “Son’s Softbank Group is the ‘Nasdaq whale’ that has shocked and worried market participants with its aggressive purchases of tech options, the Financial Times reported in its weekend edition. Softbank shares plunged on Monday as investors in Japan got a chance to respond. Still, Son is looking at a summer gain on paper of around US$4 billion on his aggressive bets.”
Cramer chimed in on his thoughts regarding these large bets in tech.
“He said that if the reports are true then Softbank is doing what ‘amateurs’ do, not what ‘professionals’ do,” an article said in TheStreet.
Tech in the U.S. could also mirror a burst bubble, which won’t bode well for the bulls. Either way, ETF investors can use leveraged trades to take advantage of the ups and downs in the tech space.
For weakness in tech, one inverse ETF to consider is the Direxion Daily Technology Bear 3X ETF (NYSEArca: TECS). TECS seeks daily investment results, before fees and expenses, of 300% of the inverse (or opposite) of the daily performance of the Technology Select Sector Index. The index is provided by S&P Dow Jones Indices and includes domestic companies from the technology sector.
Nonetheless, for traders looking to play the bullish side of tech, they can use the Direxion Daily Technology Bull 3X ETF (NYSEArca: TECL). TECL seeks daily investment results of 300% of the daily performance of the Technology Select Sector Index, which includes domestic companies from the technology sector.
For more market trends, visit ETF Trends.