Key Insights
- Nasdaq is set to introduce options contracts for SoftBank’s Arm Holdings, a significant move following the company’s major IPO.
- Analysts anticipate high demand for these options, driven by the buzz surrounding the IPO and general investor interest in AI-related themes.
- Retail investors are expected to show keen interest, closely monitoring the options’ initial activity, which may surge and then taper over time, mirroring the stock’s performance.
Investors will gain a fresh avenue to capitalize on this year’s most significant initial public offering (IPO) as options contracts for SoftBank’s Arm Holdings prepare to hit Nasdaq’s exchanges on Monday.
Nasdaq has expansive plans to introduce these options on Arm Holdings across all six of its exchanges, according to a spokesperson for the exchange who revealed this on Friday.
While Cboe Global Markets and Intercontinental Exchange’s New York Stock Exchange haven’t yet responded to inquiries regarding their own intentions to list ARM options, it’s common practice for exchanges to follow suit with similar listings.
Nasdaq’s recent reduction in the time needed to list and trade options on newly public securities has expedited this move, allowing options trading to commence as soon as the second business day after the IPO.
Market analysts expect strong demand for ARM options
Market analysts are anticipating a strong demand for these options.
“I have every reason to believe that when ARM options are listed, they will be very popular,” commented Steve Sosnick, Chief Strategist at Interactive Brokers.
While Arm Holdings may not have the household recognition of a Facebook, which is now known as Meta Platforms, it’s expected that retail traders will flock to these options. The buzz surrounding the IPO, coupled with general investor enthusiasm for AI-related themes, is likely to fuel interest.
The potential for substantial stock price movements also augurs well for options demand. As of Friday afternoon, Arm Holdings’ shares were trading around $63.55, marking a nearly 25% increase from their IPO price on Thursday.
Arm Holdings has piqued the interest of retail investors, noted Dan Raju, Chief Executive at online brokerage firm Tradier.
Most retail investors are closely monitoring the initial surge and subsequent volume trends of shares post-IPO. I anticipate the listing of options will also witness an initial surge in options activity, followed by a tapering, he remarked.