Investor bets $180M on Amazon, Facebook, Netflix, Google call options

The massive options trade has a notional value of $1.7 billion

An investor bought large blocks of upside call options on Thursday in companies such as Netflix  and Amazon.com trades reminiscent of outsized options purchases made in August by a large investor known as the "Nasdaq whale."

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The unknown investor purchased calls expiring in January and March for Netflix, Amazon, Facebook Inc and Alphabet Inc while selling shares of those companies, said Christopher Murphy, co-head of derivatives strategy at Susquehanna Financial Group.

TickerSecurityLastChangeChange %
NFLXNETFLIX INC.475.74-28.47-5.65%
FBFACEBOOK INC.263.11-17.72-6.31%
AMZNAMAZON.COM INC.3,036.15-174.86-5.45%
GOOGLALPHABET INC.1,616.11+59.23+3.80%

The four companies are collectively known among investors as the “FANG” group, for the first letters of Facebook, Amazon, Netflix and Alphabet unit Google.

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Such a trade involving options allows investors to reduce stock exposure while maintaining the ability to benefit from future gains in stock prices.

In total, the investor paid a premium of about $180 million for the options, which have a notional value of roughly $1.7 billion, according to data from Trade Alert.

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Some market watchers have attributed similar large call purchases in tech-related names made in August to SoftBank Group Corp . Those institutional trades came during a flurry of call buying driven by retail investors.

TickerSecurityLastChangeChange %
QQQINVESCO QQQ NASDAQ 100269.38-7.01-2.54%

According to some analysts, that activity prompted September’s tech-driven sell-off in U.S. stocks, as dealers who had sold those calls unwound the shares they had previously purchased to hedge against their short options positions.

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“I can’t tell you for sure who that is, but I have a feeling it’s SoftBank again,” said Amy Wu Silverman, equity derivatives strategist at RBC Capital Markets, of Thursday’s trades.

SoftBank did not immediately respond to a request for comment.

Tech-related call buying has continued, but it has cooled off since early September. Skew, a measure of demand for protective put options relative to upside call options, has recovered in names such as Alphabet, Amazon and Apple Inc.

TickerSecurityLastChangeChange %
AAPLAPPLE INC.108.86-6.46-5.60%

The stock sales accompanying Thursday’s options purchases neutralize the overall market impact of the trade, Murphy said. Moreover, given the previous “Nasdaq whale” trades, they are unlikely to spur as much reaction from other investors, and the impact is likely to be confined to options markets, he said.

“Because they’re buying a bunch of vol in big names, maybe it spurs more vol buying,” Murphy said. “But it’s more likely to have vol impact than stock price impact.”

Reporting by April Joyner; additional reporting by Ira Iosebashvili; Editing by David Gregorio