| For more news, visit us at JohnLothianNews.com and follow us on Twitter at @JLNOptions | | | | April 30, 2025 | | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | | | Lead Stories | | | $18 Million Options Bet Targets Fed Holding Rates Still All Year
Edward Bolingbroke - Bloomberg
At least one big option trader has dialed up an $18 million bet that the Federal Reserve will avoid cutting interest rates any time this year. Investors in the futures and options markets are, on the whole, still pricing in a rate reduction at the Fed's July meeting and at least two more this year. But over the last few weeks, a significant position has been building up in an options contract that will pay off if the Fed either keeps rates stable or raises them in 2025.
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Tariff-induced volatility caused spike in derivative-related margin calls, data shows
Laura Matthews - Reuters
The value of derivative-related margin calls at hedge funds and other market participants nearly tripled after the Trump administration announced larger-than-expected U.S. tariffs this month, before declining after a 90-day pause, according to OSTTRA, which provides post-trade services.
Data showed the total value of those calls rose by 180% from April 2-10, placing significant liquidity stress on investors, and raising the number of disputes between trading parties by 25%, it said.
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Market Fear Gauge Stays Subdued. Earnings Could Change It.
Brian Swint - Barron's
The Cboe Volatility Index, also known as the VIX or the stock market's fear gauge, held below 25 on Wednesday for a second day.
That's a good sign after it had been elevated for most of April. Usually any reading above 20 signals relatively big swings in stocks, and it climbed above 50 on April 8.
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One chart shows why the stock market could be headed for another period of intense volatility
Matthew Fox - Business Insider
Breadth thrust buy signals? Check. A collapse in volatility? Check.
To many chart readers, it seemed like the latest technical signals were pointing to a fresh and lasting upswing in the stock market - but not so fast.
The S&P 500 is approaching key resistance levels that could unleash a wave of selling and increase volatility in the near term.
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Chinese investors pile into gold funds at record pace; Country accounts for more than half of global bullion ETF flows over past 4 weeks in hunt for havens amid trade war
Leslie Hook and Cheng Leng - Financial Times
Chinese investors are piling into gold funds at a record rate, as Donald Trump's trade war and fears over a US recession and inflation drive a hunt for haven assets. Inflows into gold exchange traded funds in China total 70 tonnes - or about $7.4bn - so far this month, more than double the previous monthly record, according to the World Gold Council, an industry body.
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Ethereum ETFs Record $64 Million in Inflows, Breaking Multiweek Outflow Streak and Hinting at Renewed Market Optimism
Nick Thomas - Benzinga
Ethereum investors haven't had it easy lately. ETH has been slowly grinding lower, dragging the broader altcoin market with it. When you include Ethereum in the altcoin basket, its underperformance has actually weighed on the entire sector. From its all-time high of $4,900 set back in 2021, ETH is still down a brutal 63%, currently trading around $1,791. That's a level we haven't seen since March 2023. Even as Bitcoin regained momentum and many smaller altcoins started to bounce back in the last few weeks, Ethereum has looked heavy, showing no real signs of leadership. In fact, ETH has been one of the weakest majors on the board throughout this cycle.
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Top Trump adviser struggles to soothe investors in talks after market tumult; Stephen Miran met hedge funds and big asset managers after tariffs sparked Wall Street turmoil
Kate Duguid, Costas Mourselas and Katie Martin and Demetri Sevastopulo - Financial Times
Donald Trump's top economic adviser Stephen Miran struggled to reassure leading bond investors in a meeting last week that followed a bout of intense tumult on Wall Street triggered by the president's tariffs. Miran, chair of the Council of Economic Advisers, met representatives from top hedge funds and other major investors at the White House's Eisenhower Executive Office building on Friday, said people with direct knowledge of the matter.
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| | | | Exchanges | | | Demand for Chinese stocks lifts Hong Kong exchange's profits; Investors pile into technology stocks and new listings
Arjun Neil Alim - Financial Times
Surging global demand for Chinese stocks led Hong Kong's exchange operator to its highest-ever quarterly profits, as investors renewed their optimism over Chinese technology companies and new listings. Net profit at Hong Kong Exchanges and Clearing rose 36 per cent year on year in the first quarter to HK$4.1bn (US$528mn) on revenues of HK$5.5bn, up 42 per cent from the same period last year. Earnings per share rose by almost a dollar to HK$3.23.
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Hong Kong Exchange Operator Posts Record Quarter on Strong Trading, IPO Activity; The stock-exchange operator's net profit jumped 37% from a year earlier
Kimberley Kao - The Wall Street Journal
Hong Kong Exchanges & Clearing's net profit and revenue hit new quarterly records as trading and listing activity in the Asian financial hub gained momentum, spurred by the volatility in markets and a fundraising boom. The stock-exchange operator said Wednesday that net profit jumped 37% from a year earlier to 4.08 billion Hong Kong dollars, equivalent to US$525.9 million. Revenue and other income climbed 32% to HK$6.86 billion, driven by higher trading and clearing fees across the cash, derivatives and commodities markets.
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| | | | Strategy | | | SPX Convexity Falls as Tariff Optimism Grows
Mandy Xu - Cboe
Implied volatilities fell across asset classes last week as risk assets rebounded. SPX convexity premium (VIX minus SPX 1M ATM vol) came in further last week, ending the week at just 3.4 pts (vs. a near record high of 10 pts earlier this month). The quick retracement stands out compared to covid, when convexity remained elevated for almost two years even after the market had fully recovered. The lack of demand for tail protection is a sign investors still remain confident in the "Trump put".
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10 Time-Tested Investment Principles for Volatile Markets; Schaffer Private Wealth Group President Michael Schaffer Sr. and Managing Partner Michael Schaffer Jr. discuss how investors can stay calm and stick with their investment plans amid whipsawing markets.
Greg Bartalos - Barron's
The first 100 days of President Donald Trump's second term have been punctuated by tariff uncertainty, sharp policy turns, and market volatility. Since his inauguration, the S&P 500 has fallen 7.8%, its worst 100 days following a president's swearing-in since President Nixon in 1973. Although stocks have recouped most of their tariff-related losses, the outlook for the economy and investors remains highly uncertain. What is an investor to do?
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| | | | Education | | | How Reliable is Theta
tastylive (Video)
A comprehensive study examining 15 years of options data reveals that Theta, a crucial metric for short option premium traders, isn't perfectly reliable on a daily basis. Short options positions averaged less profit than their Thetas predicted, particularly for calls. Short puts demonstrated higher reliability as moneymakers compared to short calls. Managing trades early (from 45 to 21 days) significantly improved results and reduced risk. The research underscores the importance of trading small and frequently, as daily option P&Ls tend to be more variable than Theta suggests.
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Celebrating 40 Years of Financial Education with The Options Institute
Cboe
April is National Financial Literacy Month. As investors all over the world discover the immense utility of options trading, we're taking time to reflect on Cboe's decades-long efforts to provide world-class educational programming to market participants of all backgrounds. Celebrating its 40th anniversary this year, The Options Institute is Cboe's education team, dedicated to advancing investors' understanding of derivatives, financial markets and responsible, informed decision-making.
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| | | | Miscellaneous | | | Donald Trump's first 100 days mark worst for US stock market since Gerald Ford; S&P 500 has lost more than 7% since inauguration day in weakest start to a presidency since 1970s
George Steer and Kate Duguid - Financial Times
US stocks have lost more than 7 per cent during the rollercoaster first 100 days of Donald Trump's second term - the worst start for a new administration since Gerald Ford assumed the presidency five decades ago. Wall Street's S&P 500 has declined 7.2 per cent since inauguration day as Trump's aggressive trade agenda has unleashed waves of volatility that have rocked investors' faith in America's growth prospects and fuelled concerns about a tariff-induced inflation rebound in the world's biggest economy. It closed 0.6 per cent higher on Tuesday.
/jlne.ws/3GtKudC
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| | | Jeff Bergstrom
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