If you’ve been watching the news or following trends, you’ll know that the Tech industry has been on a fast-paced journey to the top.
This Friday, the recorded value of Tech stocks were higher than they have ever been. In fact, anyone with a money making eye should agree that this is the right time to invest in Tech as it can only get better right? Well, there’s an American stockbroker who thinks otherwise. He’s staking over $50 million on the value of Tech stocks dropping over the coming months.
For every ten slots on “Nasdaq’s 100 Most Publicly Traded Companies in the US” (Nasdaq-100 Index), Tech giants like Facebook, Apple, Amazon, Microsoft, and Alphabet account for at least four of them. As technology has continued to rise, they have caused the ETF to record more than a 25% increase and an added combined market value of $774 billion. Against these seemingly favorable odds, there’s this options trader who is not so sure they can keep up.
A Shock In The Market
In a very shocking trade this week, someone acquired 76,000 of the January 2019 put options set at a strike price of $135 for $6.60/share. Now note that for each put option, you get 100 shares, so please let’s do the math. 76,000 put options * 100 stock shares * 6.60 per share, that’s a whooping $50.16 million! This means that he’s willing to stake all this money on the possibility of Tech shares recording a value below $128.40 by the end of January 2019, more than a 13% loss against its current trading price. Pessimist much? If this magnitude of decline occurs, the ETF may go into correction or even recession territory.
According to CNBC “Fast Money” anchor, Dan Nathan, a trade of this nature could be a response to the rise and fall history some of these major tech stocks have been known to have. This level of “investment confidence” is rare and should be exciting to follow. We only have to wait until January 2019 to see how it will unfold.