| March 09, 2023 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | How to Lower Your Options-Trading Fees When Bid/Ask Spreads Are Wide
Steven M. Sears - Barron's
The stock and options markets are where smart people take money from dumb people.
One of the easiest ways to do that is in the bid/ask spread, which is part of every security trade.
Almost no one pays attention to spreadsâthe prices at which dealers sell and buy securitiesâexcept for professional investors, sophisticated amateurs, and regulators. Even fewer people discuss them, which is perhaps the strongest reason that you should become better acquainted with the subject.
/jlne.ws/3ZAqpHn
Cboe Plays Down Danger From Zero-Day Options After Trading Boom
Lu Wang - Bloomberg Law
Cboe Global Markets Inc. is downplaying loud warnings from some corners of Wall Street that the craze for zero-day options poses a systemic threat for the broader stock market.
The Chicago-based firm helped fuel the popularity for the S&P 500 contracts that expire in less than 24 hours, known as 0DTE, after it expanded offerings of the derivatives to cover each weekday.
/jlne.ws/3T0SnJP
U.S. Jobless Claims Jump But Remain Historically Low
Bryan Mena - WSJ
Worker filings for U.S. unemployment benefits jumped last week due to increases in New York and California but remained historically low, as demand for labor outstrips the number of people looking for work.
Initial jobless claims, a proxy for layoffs, increased by 21,000 to a seasonally adjusted 211,000 last week, the Labor Department said Thursday. That was the biggest week-to-week increase in claims since early October.
/jlne.ws/3yqdMmb
Powell's Piling on the Pressure. Why Friday's Jobs Data Just Got More Vital.
Callum Keown - Barron's
Jerome Powell on Wednesday added a small, but potentially significant, caveat to the hawkish comments he made on Capitol Hill the previous dayânoting that no decision has yet been made on the size of March's interest interest-rate hike.
The Federal Reserve chairman's comments have markets anxiously awaiting Friday's February jobs report, along with next week's inflation dataâif they weren't already.
/jlne.ws/3J4pvMe
Wall Street's Top Commentators Fear a Recession Is Around the Corner
Phil Rosen - Business Insider
Yesterday on Capitol Hill, Jerome Powell reiterated his warning that the Fed's more than ready to keep jacking up rates if necessary.
Inflation hasn't gone away as easily as policymakers want, and Powell thinks that may just warrant a steeper policy path.
He did make clear, however, that nothing yet is set in stone (traders have doubled the expected odds of a half-point hike at this month's meeting).
/jlne.ws/3YBhVhT
The Hack That Upended Derivatives Trading Spurs Calls for Action; Defenses to 'keep pace with evolving threats': CFTC's Johnson; Top US derivatives regulator is seeking to mitigate cyber risk
Katherine Doherty and Isis Almeida - Bloomberg
A cyberattack that disrupted derivatives trading in January is prompting calls for more oversight to combat the risk of hacks across financial markets. The top US derivatives regulator wants to update standards and monitoring systems that will help minimize the frequency and magnitude of hacks. The Commodity Futures Trading Commission is pushing for futures and swaps dealers to exercise more due diligence and oversight of the third-party service providers they work with, and requiring that they have a plan for responding to cyber incidents from the first day.
/jlne.ws/3F8FVSs
Stock ETFs Blamed for Liquidity Shocks in Short-Term Treasuries
Sam Potter - Bloomberg
The stock ETF boom has been blamed for seemingly every Wall Street ill, from blindly ramping up share prices and fueling volatility to undermining governance across corporate America.
Now new academic research claims that equity exchange-traded funds are even creating distortions in the world's largest debt market.
/jlne.ws/3ZVA8I4
The stock market is on weak footing as retail investors abandon the 'buy the dip' strategy and turn to higher yielding bonds
Matthew Fox - Business Insider
Retail investors are starting to retreat from their "buy the dip" strategy, and that puts the stock market at risk, according to a Thursday note from Vanda Research.
After retail buying activity hit a historic peak in February, net purchase activity dropped below $1 billion per day in early March. Such a decline weakens a significant pillar of support for the stock market, according to Vanda, and that makes the market more susceptible to volatile swings.
/jlne.ws/3ZRKY1F
| | | | | | Exchanges | | | CME Group Announces Initial Trading of New Crop Weekly Options
CME Group
CME Group, the world's leading derivatives marketplace, today announced that open interest in New Crop Weekly Options has surpassed 500 contracts, while a total of 984 contracts across 28 unique account numbers have traded since launching on January 23. New Crop Weekly Options build on the success of Short-Dated New Crop Options, which launched a decade ago and achieved record average daily volume (ADV) of 11,000 contracts in 2022.
/jlne.ws/3LaktR5
CME Group SOFR Futures and Options Reach Single-Day Trading, Open Interest Records
CME Group
CME Group, the world's leading derivatives marketplace, today announced new milestones in the growth of its SOFR derivatives contracts, with a single-day record of 9,784,528 SOFR futures and options traded on March 7 and record open interest (OI) of 54,666,191 contracts on March 8.
Individually, SOFR futures traded a record of 5,836,669 contracts on March 7, with record OI of 10,897,300 contracts the same day. SOFR options traded a record 4,533,369 contracts on March 8, with record OI of 43,781,996 contracts the same day.
/jlne.ws/3J8P0vM
Reflecting on Trading Futures and the Future of Trading
ICE House - NYSE
CME Group Chairman and CEO Terry Duffy's career, from his first day in the pits of the Merc to testifying before Congress on the potential pitfalls of FTX, has been marked by his willingness to roll up his sleeves, mix it up, and speak his mind. Terry returns to the NYSE, where he led the first IPO of a US exchange two decades ago, for a far-ranging conversation on navigating the regulatory process, the biggest issues facing the markets, and some of the even bigger issues facing the country. Terry says that despite constant change, the industry remains rooted in the underlying mechanisms and principles upon which the derivatives business was founded.
/jlne.ws/41WHFbp
****** I really liked Terry Duffy's pro-woman stance in this interview. He and I have more in common than either of us probably wishes to admit.~JJL
Demystifying euro clearing
Eurex
As geopolitical and macroeconomic events battered market conditions, the debate over European swaps clearing has dimmed, with UK CCP equivalence in place until 2025. But this hasn't diminished the importance of the work that still needs to be done to support a thriving cleared swaps markets on the continent. Ahead of the Eurex Derivatives Forum on March 22-23, Eurex sat down with Gaspard Bonin, Deputy Global Head of Derivatives Execution & Clearing at BNP Paribas, to talk about the market's future.
/jlne.ws/3ZxMrKU
| | | | | | Regulation & Enforcement | | | Wall Street watchdog fines Webull for options customer approval violations
John Mccrank - Reuters
The Financial Industry Regulatory Authority on Thursday said it fined retail brokerage Webull Financial $3 million for failing to exercise reasonable due diligence before approving customers for options trading, as well as issues around how it responded to customer complaints.
Wall Street's self-funded watchdog said Webull's automated system missed red flags and approved customers for options trading who did not meet the brokerage's eligibility criteria between December 2019 and July 2021.
/jlne.ws/3YDl0Op
Opening Statement of Commissioner Caroline D. Pham before the Market Risk Advisory Committee
CFTC
Good morning. Thank you to Commissioner Johnson; Bruce Fekrat, the Designated Financial Officer; and to the many guest speakers and those Members in attendance for today's meeting of the Market Risk Advisory Committee (MRAC). I value your time and contributions. I am pleased to see that the MRAC is following on to and continuing the important discussions that the Global Markets Advisory Committee (GMAC), which I sponsor, raised at our February 13 meeting a couple weeks ago-global market structure including trading, liquidity, and clearing; global commodity market volatility; and digital assets.
/jlne.ws/40b6ejh
Opening Statement of Commissioner Kristin N. Johnson Before the Market Risk Advisory Committee Meeting
CFTC
Good morning and welcome to the first meeting of the Market Risk Advisory Committee (MRAC) in 2023 and our second MRAC meeting under my sponsorship. As our agenda indicates, today we will engage in the CFTC's first public meeting examining recent cyber disruptions that affected cleared derivatives markets. On January 31, 2023, in a short statement, ION Cleared Derivatives, a division of ION Markets-a Dublin-based firm, acknowledged that "a cybersecurity event" had "affected some of its services."
/jlne.ws/3Yx4bVq
| | | | | | Strategy | | | 0DTE Options: Why You Should Trade Them
Schaeffer's Investment Research
Discover what 0DTE options are and why they have become massively popular in recent months.
What is a 0DTE option? A 0DTE (Zero Days To Expiration) option is an options contract set to expire at the end of the current trading day. This means that the value of a 0DTE option is entirely determined by the underlying asset's price movements on that day.
Experienced options traders find value in trading 0DTE options because of the massive return potential. As of late 2022, the S&P 500 Index (SPX) offers them every day of the trading week, giving traders tons of potential trading opportunities.
/jlne.ws/3l3NvXG
Are You Buying Funds at the Wrong Time? Here's How to Tell.
Lewis Braham - Barron's
Successful investing is counterintuitive. Unlike, say, an action film, you want your investments to be as boring as possible. The ideal funds in today's volatile markets aren't those sexy tech or aggressive growth ones, but staid, predictable balanced or allocation funds that are well-diversified between stocks and bonds.
/jlne.ws/3l3k3kK
Disparity in ATM Options
Cboe (Video)
In #Vol411, Scott Bauer @cboesib has your market update and talks about the disparity in implied #volatility in $SPX #options from tomorrow to Monday because of the jobs report Friday.
/jlne.ws/3T4R3p9
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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
Editor-in-Chief
| | | Jeff Bergstrom
Editor
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