Bill Cara

Traders have been playing “I’m feeling Lucky”

Google’s homepage has two trademarked buttons: one labeled “Google Search” and one labeled “I’m Feeling Lucky”. If you click on the “I’m Feeling Lucky” button, Google will send you immediately to the first search result, bypassing the search engine results page.

Isn’t that what traders have been doing lately? In a rising market, they buy the most popular stocks along with call options. In a falling market, they sell those stocks and call options and short the stocks and buy put options.

This latest tactic has nothing to do with searching for investment quality and price discovery, which is the purpose of markets. This “I’m feeling lucky” situation is a matter of immediacy without thinking, of playing the same stocks with the same tactics. In other words, the market has become a tool to manufacture (i.e., manipulate) prices.

No wonder people call the market a game. It is. Or at least it has become one.

According to media reports, the players at Softbank Corp (SFTBY), with their knowledge of technology companies, is playing this game at full throttle.

https://www.cnbc.com/2020/09/04/softbank-reportedly-the-nasdaq-whale-that-bought-billions-in-options.html

https://www.zerohedge.com/markets/one-day-after-zero-hedge-ft-unmasks-softbank-call-buying-nasdaq-whale

https://www.zerohedge.com/markets/momo-meltdown-tech-wreck-spark-stocks-worst-week-6-months-dollar-spikes

I think this “game” may soon catch up to these “players”.

I have always said that the market is not a game that people play. The market plays people.

Market success is not a matter of luck. Smart people win.