Mag 7 Bulls Pour Millions Into Options, Defying Sell-Off: Options Chatter
There’s no shortage of bulls with millions of dollars to spend on Magnificent Seven stock options, even amid escalating trade tensions that fueled a massive sell-off, sending the tech-heavy Nasdaq into a bear market.
$Tesla (TSLA.US)$, the electric vehicle giant that’s already fallen by more than half from its peak, attracted the three biggest bullish block trades in options tied to the Magnificent Seven stocks. The biggest transaction cost the buyer a premium of more than $26 million.
The fourth largest transaction involved an active buyer paying a $17.8 million premium for $Amazon (AMZN.US)$ call options expiring today after the e-commerce giant that’s also the market leader among cloud services providers, saw its shares tumble more than 27% from their highs.
The rest of the Magnificent Seven including $NVIDIA (NVDA.US)$, $Meta Platforms (META.US)$, $Apple (AAPL.US)$, $Alphabet-A (GOOGL.US)$ and $Microsoft (MSFT.US)$ all attracted block option trades with premiums costing more than $5 million each, exchange data showed.
The bullish block trades defied a carnage in the stock that saw the $S&P 500 Index (.SPX.US)$ slumped almost 6% Friday after China retaliated against the latest round of tariffs imposed by US President Donald Trump. Nasdaq also sank, extending its slump from its highest close to more than 20%, which meets the common definition of a bear market.
“We think that if there is actually going to be a real growth slowdown in the market, at these levels, given how much de-risking we've seen,” Shawn Tuteja, who oversees ETF and custom baskets volatility trading within Goldman Sachs Global Banking & Markets, said in a podcast yesterday. “Positioning is much cleaner in a lot of these names, and the Mag-7 names in particular are the ones that will trade defensively going forward.”
Even before Trump unveiled his plans to slap extensive tariffs on Thursday, the Magnificent Seven stocks were already battered by concerns that these tech giants were overspending in building out the artificial intelligence (AI) infrastructure. That came after DeepSeek unveiled its AI that it said took less than $6 million to build.
“There's been a lot of questions about AI recently, and some people thought that AI was in a bubble over these past couple of years, especially given that it seemed like a lot of these companies did not have competition,” Tuteja said. “Now, in our view, we think that a lot of that froth has come out of the market, both in terms of the AI names, but also in terms of the large cap tech names here in the US.”
The Magnificent Seven stocks could once again offer some shield, should the tariffs start hurting consumer spending, crimping corporate profits. This year, FactSet noted that equity analysts are starting to cut their earnings estimates for companies even before the official tariff announcements were made.
An aggregate of the median earnings estimate for the first quarter declined by 4.2% between Dec. 31 and March 31, FactSet said in a report. That’s a deeper cut than the average 3.3% seen over the past five years, and the 15-year average of 3.2% according to the report released Friday.
The decline in earnings estimate was led by the Materials (-17.6%) and Consumer Discretionary (-10.4%) sectors, FactSet said.
“The Magnificent 7 has outperformed the broader market 10 of the past 11 years, and we think that people are now underweight these names,” Tuteja said. “If you look at a valuation basis, the Magnificent 7 is trading at its cheapest forward valuation to the S&P in the past 10 years, that is trough valuation. So, we think that there's some value to be found in these names that no one seems to want anymore.”
Share your thoughts on the Magnificent Seven stocks in the comments section. Do you agree with the views of Goldman’s Tuteja? Can the Magnificent Seven stocks live up to that title and again spur a stock market rebound? Let your voice be heard by voting below. And if you want to read more options columns, follow me here.
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Luzi Ann Santos
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Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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71781791 : Fake news. You don't think banks know how to hedge small positions to protect themselves just in case it reverses? Think about how much they've already made on the way down. Media is always here to brainwash you.
Tonyco : If you are throwing away millions you can throw 1 or 2 my way i promise I will be irresponsible with it
QM137over1 : That depends on whether LTCM and Gamma can avoid mismatches.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
LandMoor : it's a lot of new up and comers that mimick but add extra for cheaper. but who knows
明天你好 : I'll say it again, AI is not a bubble; this is my life experience. China needs AI, and the USA needs it too.
Tan Chin Seng klang 明天你好 : good
news
105755280 明天你好 : Who are you. The Internet is not a bubble, but at that time the Internet stock prices were.
Derpy Trades : Beginning evidence that I'm right about us being near at least a medium-term bottom.
Clarence Walker4 : The Magnificent Seven is a Money Maker ,Yes and it will rise higher 100%
71781791 Derpy Trades : lol look at the graph. What confirmation of any bottom do you have yet?
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