| March 29, 2023 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | Gain Small-Cap Exposure with Options on the Russell 2000 Index
Learn why small-cap indexes like the Russell 2000 have historically outperformed large-cap counterparts, and how an options strategy can help you manage your risk while expressing an opinion on the index.
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CME Group's Terry Duffy Reflects on Career, CME Civic Leadership and Dreams for Exchange Group
JohnLothianNews.com
John Lothian News interviewed Terry Duffy, the longtime CME Group chairman, who has served as CEO since 2016, at the FIA's International Futures Industry Conference in Boca Raton, Florida. We asked him about his recent interview with ICE's podcast, about CME's corporate citizenship and how that relates to the issues Chicago is facing and even his wife's recent carjacking.
Watch the video »
| | | | | | Lead Stories | | | 'Degenerate Gambling' in Zero-Day Options Thrills Retail Traders
Claire Ballentine and Charlie Wells - Bloomberg
They've become a high-speed, high-risk, high-reward tool in turbulent markets: Options with shelf lives so short they expire in less than a day.
For big investors, these derivatives â "zero-day-to-expiry" options, or 0DTE for short â offer a way to hedge short-term risk in an era when the market flip-flops daily. That's in theory. In practice, success is far from certain, and even some Wall Street pros don't fully understand them.
/jlne.ws/3Zl5cAg
Stock Market Just Flashed Sign That Silicon Valley Bank Crisis Is Over
Matthew Fox - Markets Insider
The stock market just flashed an important signal that suggests the ongoing banking crisis that was sparked by the collapse of Silicon Valley Bank earlier this month is over.
That's according to Fundstrat's Tom Lee, who highlighted in a Wednesday note that the CBOE Volatility Index fell below the all-important 20 level for the first time since the banking crisis started.
/jlne.ws/3lRq9Fk
BofA Sees Risk of Another FX Liquidity Crunch After Bank Crisis
Naomi Tajitsu - Bloomberg
The global currency market is vulnerable to a liquidity crunch later this year as financial conditions tighten and economic growth slows, Bank of America Corp. warned.
Even after the market emerged relatively unscathed from the latest banking turmoil, implied volatility in major currency pairs jumped this month as concerns about the US banking sector weighed on the dollar and drove the yen higher. Still, the move was "far from crisis levels," strategists at BofA said. Volatility remained lower compared with late last year, when a surge in demand for the US currency drove euro-dollar one-month implied volatility to the highest levels since early 2020.
/jlne.ws/3zeKd7y
US money supply falling at fastest rate since 1930s
Jamie McGeever - Reuters
U.S. money supply is falling at its fastest rate since the 1930s, a red flag for the economy and financial markets.
Money supply has now been shrinking year-on-year since December, an unprecedented development in modern times that should make investors sit up and take notice - growth, asset prices and inflation could all weaken.
/jlne.ws/3Zl9sje
| | | | | | Exchanges | | | Cboe Australia completes technology migration alongside launch of Cboe BIDS Australia; Technology migration follows Cboe's acquisition of Chi-X Australia in 2021 and will aid expansion into Australia and Asia-Pacific, while Cboe BIDS Australia becomes first new launch post-migration.
Wesley Bray - The Trade
Global market infrastructure and tradable products provider Cboe Global Markets successfully migrated Cboe Australia to the Cboe technology platform on 27 March. Cboe Australia, which was formerly Chi-X Australia, was acquired by Cboe Global Markets in July 2021 and then later rebranded as Cboe Australia in February 2022.
/jlne.ws/3LXoJUn
MEMX Options Aims to Add Value to the Exchange Landscape
Anna Lyudvig - Traders Magazine
MEMX Options, a soon-to-be-launched options exchange, is planing to offer dynamic risk controls, according to MEMX CEO Jonathan Kellner. "This risk management functionality will allow firms the ability to dynamically manage their risk exposure on our Exchange and should help facilitate more competitive markets as a result," he told Traders Magazine.
/jlne.ws/3KfAqnZ
Crossing the finish line: NextGen ETD project completed
Eurex
With the technical launch of NextGen ETD in June 2022, Eurex has set the foundation for changing the way exchange-traded derivatives (ETD) contracts or products are identified. To leverage the functionalities and create benefit for our clients, three additional product initiatives are offered as of 27 March. We recently interviewed Jonas Ullmann, Eurex's Executive Board Member and Chief Operating Officer, about the project:
/jlne.ws/40Gy9rj
| | | | | | Regulation & Enforcement | | | CFTC Charges Chinese National with Fraudulent Scheme to Trade Against Employer
CFTC
The Commodity Futures Trading Commission today announced it filed a complaint in the U.S. District Court for the Northern District of Illinois charging Dichao Xie, a Chinese national, with a fraudulent scheme in which he misused knowledge of his employer's trading in feeder cattle futures and options to trade for his own benefit in breach of a duty to his employer.
/jlne.ws/3lOhLX0
Former CFTC Chair on Crypto Derivatives, Stablecoin Regulation
CoinDesk
"I worry sometimes that regulators, instead of trying to set up a regulatory framework, will cause activity to move offshore in ways that make it harder to regulate," said Timothy Massad, former CFTC chair and Harvard Kennedy School research fellow and digital assets policy project director. Massad also discusses his outlook for U.S. regulation following the U.S. Commodity Futures Trading Commission suit against prominent crypto exchange Binance and its founder, Changpeng Zhao.
/jlne.ws/3TTKSEN
Binance Case Is Clear Evasion of Law, Says CFTC Chair Behnam
Camomile Shumba - CoinDesk
There was clear documentation of Binance's intent to evade the law, said U.S. Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam in a CNBC appearance on Tuesday. The CFTC on Monday sued Binance and CEO Changpeng Zhao, alleging they knowingly offered unregistered crypto derivatives products. The regulator is charging the exchange and its founder with allegedly violating laws against offering futures transactions, failing to register as a futures commissions merchant and poorly supervising operations, among other things.
/jlne.ws/40mNUnN
| | | | | | Strategy | | | How to Use Options Strategies to Cash in on Market Fear or Greed
Steven M. Sears - Barron's
Volatility is what happens when you're busy making other financial plans.
With alarming frequency, something regularly and unexpectedly seems to occur in the economy that unleashes chaos into the financial markets.
Perhaps this reflects the technical ability of the markets to react instantly, or maybe it's because so many people are overly sensitive to price swings. Whatever the reason, a major volatility event seemingly occurs every few years and sends markets into tailspins of varying lengths.
/jlne.ws/3JVsZB3
Traders Go Long Treasuries After Hedge Funds Unwind Short Bets
Edward Bolingbroke - Bloomberg
Traders are leaning toward further gains in the world's biggest bond market, after a rally that got a major boost from short-covering by hedge funds this month.
That's the read from Citigroup Inc.'s latest modeling as well as Treasuries positioning data from the Commodity Futures Trading Commission. The scramble to dump short positions helped drive two-year yields down around 100 basis points from a March 8 peak above 5% as banking-sector turmoil led traders to exit bets on Federal Reserve tightening.
/jlne.ws/3npRb73
Wall Street Struggling to Figure Out What Bank Stress Means for Markets
Lu Wang - Bloomberg
Struggling to figure out what all the financial stress means to markets? So are professional forecasters.
As fast and furious as the news has come, the reaction among stock strategists and earnings analysts has been uniform: no reaction. Whether unwilling to commit to a new course, unable to formulate a new thesis â or simply unconvinced anything important has happened â estimates remain almost exactly where they were before all the action erupted.
/jlne.ws/3ZsixqD
Volatility Sell Coming
Cboe (Video)
JoeTigay @JoeTigay updates us on $VIX, $JPM, #SP500, and takes a look at next quarter. #Vol411
/jlne.ws/3lMfbRx
| | | | | | Miscellaneous | | | What NFT mania can tell us about market bubbles
Bryce Elder - Financial Times
Remember NFTs? They were like Pet Rocks but instead of a rock there was fraud. Now they're dead, pretty much, and what's left is data.
It's data that might prove quite useful, in a way that proprietary digital receipts for JPGs of monkeys never were, because it promises a 360-degree view of speculation in its purest form.
/jlne.ws/3TQxEc8
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| | | | John Lothian News (JLN) is the news division of John J. Lothian & Company, Inc. (JJLCO). The online media and financial services firm is staffed by derivatives industry, journalism and technology professionals. | | | | | | | John Lothian News Editorial Staff: | | | John Lothian
Publisher | | | Sarah Rudolph
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| | | Jeff Bergstrom
Editor
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