| August 06, 2024 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | In July 2024, Cboe Global Markets reported significant increases in trading volumes across several key areas. Index options saw a 20.2% year-over-year increase to an average daily volume (ADV) of 4,140,000 contracts, while futures rose 26.1% to 267,000 contracts. Multiply-listed options also grew by 1.0% to 11,145,000 contracts. Increases were observed in U.S. equities off-exchange trading (3.5%), Canadian equities (2.9%), European equities (11.8%), Cboe Clear Europe cleared trades (26.7%) and net settlements (28.2%), Australian equities (23.7%), Japanese equities (306.9%), and global FX (1.4%). However, there were declines in U.S. equities on-exchange trading (-5.9%), and Canadian equities saw a substantial month-over-month decrease (-20.8%), along with smaller declines in European equities (-4.6%), and Australian equities (-2.6%). ~JJL
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Agricultural Futures: Navigating the Fields: Futures Discovery EP 12
JohnLothianNews.com
Today, we're delving into the intricate world of Agricultural Futures-a realm shaped by the rhythm of nature and the pulse of global markets. In this episode, we'll explore the quantitative challenges that traders face in the real world. It's not just about numbers on a screen; it's about the unpredictable nature of weather, critical data in crop reports, and the global dance of trade policies.
Watch the video »
Steve Sosnick of Interactive Brokers Discusses Trends and Risks in the Options Market at the Asheville Conference
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Former ABN AMRO Executive Mike Dennis Discusses Market Trends and Opportunities in Crypto and Fixed Income at Options Conference
Watch Video »
| | | | | | Lead Stories | | | Investors made a record number of option bets that equities would fall as markets dived on Monday; Put options are a bet that the price of an underlying asset will fall
Jamie Chisholm - MarketWatch
Traders on Monday made a record number of option bets that equities would fall, a stark illustration of just how anxious investors became as stock markets tanked.
Data from S&P Dow Jones Indices showed 3.3 million S&P 500 put options changed hands in the first session of the week, when the underlying benchmark index tumbled 3%.
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Traders Rush to Hedge Against Extreme Market Events After Manic Monday; Options shows strong demand for tail-risk protection in S&P; Renewed bout of volatility hits markets Monday as stocks slide
Denitsa Tsekova - Bloomberg
As the fear factor mounted on trading desks across Wall Street on Monday, the Cambria Tail Risk ETF (ticker TAIL), an actively managed exchange-traded tail-risk fund, jumped 4.5% for its best day since March 2020. Long among the biggest laggards during the relentless bull market, the defensive strategy - often known as Black-Swan hedging - is suddenly in vogue. The dash for protection comes as the tech-heavy Nasdaq 100 Index saw its biggest intraday slump since 2022, ending the day 3% lower. Wall Street's "fear gauge" - the VIX - spiked to the highest level since the coronavirus outbreak amid concerns over the Federal Reserve's ability to avoid a recession.
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$6.4 Trillion Stock Wipeout Has Traders Fearing 'Great Unwind' Is Just Starting
Ruth Carson, Lu Wang, Vildana Hajric and Bailey Lipschultz - Bloomberg
The numbers flashing on trading screens on Monday were shocking even to market veterans. In Tokyo, the Nikkei was down 12%. In Seoul, the Kospi sank 9%. And when the opening bell rang in New York, the Nasdaq plunged 6% in seconds. Cryptocurrencies sank; the VIX, a gauge of stock market volatility, skyrocketed; and investors piled into Treasury bonds, the safest asset of them all. Whether Monday's wild gyrations mark the final bang of a global selloff that started to build last week or signal the beginning of a protracted slump is impossible to know. On Tuesday, some of the worst-hit markets rebounded with key gauges in Japan soaring more than 10%, though few were saying a bottom had been reached.
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Record VIX Spike Rocks Wall Street Traders All-In on Market Calm; Wagering against stock turbulence is a huge Wall Street trade; Positioning feeds more volatile moves, says Sidial at Ambrus
Justina Lee - Bloomberg
The Monday meltdown across assets is hammering a slew of derivatives trades betting on enduring calm in the stock market - threatening to set off a chain reaction that could intensify the global turbulence. Wall Street has for months been minting money with various strategies tied to stock tranquility, often via products that sell protective options in order to juice returns. But the scale of the boom in these so-called short volatility bets had stirred worries of what would happen when turbulence hit.
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S&P 500 put option volume hit record on Monday
Jamie Chisholm - MarketWatch
The chart below provides a stark illustration of just how anxious investors were on Monday as stock markets tanked.
The total volume of S&P 500 put options traded was a record 3.3 million, according to Benedek Voros, director of Index Investment Strategy at S&P Dow Jones Indices.
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Investors brace for 'regime shift' as market volatility returns; Surge in 'fear gauge' could herald tougher time for capital markets activity
Nicholas Megaw, Harriet Clarfelt, Madison Darbyshire and George Steer - Financial Times
Investors are bracing for more volatility this summer after this year's calm in global financial markets was shattered.
A surge in the Vix index - the market's "fear gauge" which shows how far investors expect US stocks to swing over the next month - to its highest level on Monday since the start of the coronavirus pandemic in early 2020 could herald a tougher period for global stocks and put a dampener on capital markets activity in the short term, said analysts.
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The Vix 'fear gauge' index is falling - but it hasn't given stocks the all-clear yet; The Cboe Volatility Index was on track for its biggest drop ever on a closing basis Tuesday after Monday's surge
Joseph Adinolfi - MarketWatch
The Cboe Volatility Index was falling fast on Tuesday following Monday's surge, but investors shouldn't interpret this as an all-clear to buy back into stocks.
Instead, history shows that even after short spurts of volatility, stocks tend to remain unsettled for at least several weeks, according to Nicholas Colas, co-founder of research shop DataTrek. Any investor tempted to buy back in might want to wait for the dust to settle.
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Is This 1987 All Over Again? What's Driving the Market Meltdown? Past routs offer lessons after Black Monday Morning
James Mackintosh - The Wall Street Journal
Financial markets are supposed to capture the wisdom of the crowd, but on Monday the crowd ran in all directions waving its hands in the air screaming. Japan's stock market fell the most in 37 years with a 12% plunge that wiped out all its gains for the year, while in the U.S. the VIX index of implied stock volatility briefly had its biggest rise ever. Panic hit. The selloff was triggered by Friday's jobs data prompting a sudden switch in the economic narrative from soft landing to hard landing. Add to the mix a period of deflating hype about artificial intelligence and a Bank of Japan rate rise designed to strengthen the yen. News that Warren Buffett's Berkshire Hathaway had sold half its Apple shares and boosted its cash pile added to the pain.
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'It Hurts Confidence:' Volatility Upends Happy Crypto Narrative; Bitcoin plunges, Ether posts steepest decline since 2021; Crypto had one of its best bull runs this year until Monday
Muyao Shen - Bloomberg
For a brief moment, everything appeared to be lining up in the right direction for digital-asset proponents. The US approved ETFs for the two largest cryptocurrencies, US presidential candidate Donald Trump shifted to being a supporter and Bitcoin was no longer so closely tied to stock market swings. That was the prevailing narrative until a selloff in the riskier corners of all markets began during Asian trading hours on Monday, serving as a reminder that the volatile nature of digital assets can cut both ways in a year that saw Bitcoin climb to record highs. At one point Bitcoin was down more than 16% on Monday, while second-ranked Ether sank as much as 23% in its steepest decline since 2021.
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US market volatility puts 'buffer' ETFs in the spotlight
Suzanne McGee - Reuters
The spike in stock market volatility may be good news for at least one group of asset managers: those rolling out "buffer" exchange-traded funds (ETFs) that offer investors the chance to swap some stock market upside for downside protection.
Over the last three years, assets invested in these products have soared to $41 billion or more from less than $10 billion. They have seen inflows in recent days as well, as investors seek shelter from a rout in global stocks and other risky assets.
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Crypto ETF Complex Hit by Selling Spree in First Big Stress Test; Outflows in spot-Bitcoin ETFs are the worst since May; Investors also pull cash from Ether ETFs amid global selloff
Isabelle Lee and Emily Graffeo - Bloomberg
Investors yanked nearly half a billion dollars from cryptocurrency-linked funds as a global market meltdown sparked the first major selloff for the speculative asset class since it went mainstream via ETFs earlier this year. Exchange-traded funds that invest directly in Bitcoin have had four straight days of outflows, totaling roughly $423 million, according to data compiled by Bloomberg. The outflows contributed to the worst weekly exodus since early May for the batch of nearly a dozen spot ETFs that launched in January.
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Wall Street Pros Keep Their Heads as Hedges Start Working Again; Treasuries rallied as stocks declined; quality strategy won; Bond gains will help limit deleveraging, UBS team says
Justina Lee - Bloomberg
There's at least one silver lining from this week's drama on Wall Street and beyond: Key defensive investing strategies are alive and well - restoring faith in hedging trades that have misfired in recent years.
After failing to live up to their protective mission in the 2022 rout, Treasuries have rallied throughout the stock meltdown, taking their 60-day correlation with the S&P 500 ever closer to the negative territory that signals they're hedging equities again.
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A Volatility Storm Is Buffeting Markets. When Will It Clear?; Stocks rebounded Tuesday, but there might still be bumpy weeks ahead
Jon Sindreu - The Wall Street Journal
This week's stock-market roller coaster appears to be driven by a reversal in speculative trades, rather than the popping of a bubble or an omen of economic disaster. But that doesn't mean we are in the clear.
Japan's Nikkei 225 index rose 10.2% Tuesday, undoing more than half the damage caused on Monday, when it recorded its worst one-day drop since the 1987 flash crash. Stocks also rose in European morning trading, albeit much less dramatically.
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| | | | | | Exchanges | | | Cboe options volume up 6% in July on buoyant US market
Gregory Rosenvinge - FOW
Cboe Global Markets has reported its total options trading volume rising 6% in July, with particular growth in index options amid wider elevated activity in the US options market.
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Cboe to Focus on Importing Global Trading into US
Shanny Basar - Traders Magazine
Fredric Tomczyk, chief executive of Cboe Global Markets, said the group will be less focussed on acquisitions and capital will be allocated to organic growth initiatives, investing in the global technology platform and returning cash to shareholders.
On the second quarter results call on 2 August, Tomczyk said he is sharpening the strategic focus of the group to areas that have the most valuable growth opportunities. He took over chief executive in September 2023 and has been carrying out a strategic review.
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Farmer sentiment improves despite financial performance concerns
CME Group
Three broad-based measures of farmer sentiment improved in July as the Purdue University/CME Group Ag Economy Barometer index rose 8 points to 113, the Index of Current Conditions increased by 10 points to 100, and the Index of Future Expectations at 119 was 7 points higher than a month earlier. Despite declines in corn and soybean prices from mid-June to mid-July - Eastern Corn Belt cash prices fell 11% and 5%, respectively - farmer sentiment improved in July. Responses to the individual questions attribute this positive shift to fewer respondents reporting worsened conditions compared to a year ago and a decrease in those expecting negative future outcomes. This month's Ag Economy Barometer survey was conducted from July 15-19, 2024.
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July 2024 figures at Eurex
Eurex
Eurex, Europe's leading derivatives exchange, reported a 30 percent increase in total trading volume, reaching 154.3 million contracts in July, compared to 118.6 million contracts in the same month last year. Interest rate derivatives continued to show significant growth, rising by 42 percent from 48 million to 68.3 million contracts. Equity derivatives grew by 43 percent, totaling 22.8 million contracts, while index derivatives saw a 16 percent increase, from 54.4 to 63 million traded contracts.
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Nasdaq Reports July 2024 Volumes
Nasdaq
Nasdaq (Nasdaq: NDAQ) today reported monthly volumes for July 2024 on its Investor Relations website. A data sheet showing this information can be found at: http://ir.nasdaq.com/financials/volume-statistics.
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Tradeweb Reports July 2024 Total Trading Volume of $40.5 Trillion and Average Daily Volume of $1.82 Trillion
Tradeweb
Tradeweb Markets Inc. (Nasdaq: TW), a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, today reported total trading volume for the month of July 2024 of $40.5 trillion (tn)[1]. Average daily volume (ADV) for the month was $1.82tn, an increase of 43.5 percent (%) year-over-year (YoY).
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ASX Group Monthly Activity Report - July 2024
ASX
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| | | | | | Strategy | | | The S&P 500 falling 5% has historically been a good buy-the-dip opportunity, Goldman says
Matthew Fox - Markets Insider
The S&P 500's 6% decline over the past three days represents a great buying opportunity for investors, according to a note from Goldman Sachs strategist David Kostin.
An unwind of the yen carry trade, Warren Buffett slashing his stake in Apple, and concerns about an imminent recession all contributed to a sharp volatility event on Monday, with the S&P 500 dropping 3%.
However, despite the decline, the S&P 500 is still up nearly 10% year-to-date and the sell-off sparked a reset in valuations, with the index's forward price-to-earnings multiple falling to 20x.
/jlne.ws/3YAFj2C
Put Spreads
Cboe (Video)
Watch #Vol411 for coverage from Tim Biggam @delta_desk on the $VIX Index, backwardation in the #VIX futures term structure and more.
/jlne.ws/3AfomAN
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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
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