| August 14, 2024 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | |  TradeStation's James Putra talks with JLN about options, crypto derivatives, AI and other trading tools at the OIC conference JohnLothianNews.com JLN spoke with James Putra, vice president and head of product at TradeStation, at the Options Industry Conference in Asheville, NC. The interview is part of the JLN Industry Leader video series sponsored by OCC. In the interview, Putra talked about the pressure on the spot crypto market and said that trying to squeeze it into traditional finance is not necessarily better for the individual customer, and brings high risk for that customer. Watch the video »  Agricultural Futures: Navigating the Fields - John Lothian News Watch Video »
| | | | | | Lead Stories | | | Oil Options Activity Leaps With Market Awaiting Iran Retaliation
Alex Longley - Bloomberg
Oil traders are returning to options contracts to hedge against the risk of a price spike as markets brace for a possible Iranian attack on Israel.
Bullish call options have been fetching a premium over bearish puts for each of the last three sessions, the longest run since Iran first attacked Israel in April. Trading volumes for calls on the global Brent benchmark also are elevated, with the 30-day average being the highest since May.
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Why a historic surge in the VIX wasn't the signal investors thought it was; Any market-timing signals gleaned from the move should be taken with a grain of salt, strategist says
Joseph Adinolfi - MarketWatch
An earlier version of this story included an inaccurate description of an out-of-the-money option contract. It has been corrected.
Investors might be reading too much into last week's historic surge in the Cboe Volatility Index, better known as the VIX or Wall Street's "fear gauge."
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SPX Index Vol Metrics Normalize Quickly Post Monday Jump
Mandy Xu - Cboe
While equity and FX vols surged last week on the back of the carry trade unwind, volatilities in other asset classes (particularly rates and credit) remained relatively calm, suggesting last week's sell-off was purely positioning-driven rather than macro fundamental in nature. As a result, the volatility spike - at least in the US markets - was short lived with the VIX index ending the week lower by 3 pts. Other SPX index risk metrics, including skew and correlation, have all normalized as well (see chart below). In contrast, Asia markets still remain on edge, with both NKY and USDJPY implied volatilities retracing only ~half of last week's increase.
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UBS Profit Beats Estimates in Boost to Ermotti's Buyback Plans; Bank affirms plan to return $1 billion through 2024 buybacks; Investment bank posts higher than expected pre-tax profit
Myriam Balezou and Jan-Henrik Foerster - Bloomberg
UBS Group AG posted higher than expected profit in the second quarter, as investment banking revenue and progress in integrating Credit Suisse helped bolster Chief Executive Officer Sergio Ermotti's efforts to return capital to shareholders.
The Zurich-based bank said net income was $1.1 billion, about double analyst estimates. Growth in deal-making revenue at the investment bank beat many Wall Street peers, while a lower than expected loss at the unit dedicated to winding down Credit Suisse legacy assets helped offset a miss in the wealth management division.
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| | | | | | Exchanges | | | MIAX Sapphire joins OCC; The move follows the official launch of the MIAX Sapphire electronic exchange on 12 August 2024; Sapphire is MIAX's fourth US listed options exchange.
Claudia Preece - The Trade
The Options Clearing Corporation (OCC) has confirmed that MIAX Sapphire has become the newest options exchange participant. Andrej Bolkovic, chief executive of OCC, said: "OCC congratulates MIH on the launch of its fourth listed options exchange. As the central counterparty clearinghouse for all US listed options, we are pleased to offer our clearing and settlement capabilities to MIAX Sapphire and to support the exchange-traded options industry's continued growth."
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ICE Futures U.S. 2024 Columbus Day and Canadian Thanksgiving Day Trading Schedule
ICE Futures U.S.
There will be no trading in Canola futures and options contracts on Monday, October 14, 2024, in commemoration of Canadian Thanksgiving Day. This Canadian holiday coincides with the U.S. Columbus Day holiday, and all ICE Futures U.S. contracts other than Canola futures and options will follow regular trading hours and daily settlement window times on this day. . Please note that due to the fact that Columbus Day is a bank holiday in New York, October 14, 2024 shall not be considered a Business Day for purposes of determining Notice and Delivery Days for the October 2024 Cotton No. 2 contract.
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CME Group Foundation Awards 2024 Higher Education Scholarships to Historically Underrepresented Students
CME Group
CME Group Foundation today announced that 18 historically underrepresented students majoring in finance, technology and related fields have each been awarded up to $20,000, which is renewable for three years. Since its launch in 2019, this program has awarded over $3.5 million in scholarships to nearly 100 students at 11 partner colleges and universities in the U.S.
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Rule 807. Open Long Positions During Delivery Month
CME Group
At such times and in such manner as shall be prescribed by the Manual, clearing members shall submit a complete and accurate record of dates of all open purchases for use in making deliveries. Clearing members shall be fully responsible for inventories submitted to the Clearing House. This rule shall not apply to trading in options contracts.
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| | | | | | Regulation & Enforcement | | | NYSE Arca withdraws request to list options on commodity trusts, crypto ETFs; It's the latest in a flurry of regulatory activity around options on crypto funds.
Alex O'Donnell - Cointelegraph
New York Stock Exchange's (NYSE) Arca electronic exchange withdrew a rule change it proposed in January that would have allowed options trading on commodity-based trusts, including cryptocurrency exchange-traded funds (ETFs), according to an Aug. 13 filing.
The purpose of the proposed change was to "permit the listing and trading of options on Commodity-Based Trust Shares," according to the Jan. 19 filing. It would have included options on crypto ETFs such as Grayscale Bitcoin Trust (GBTC), according to a Feb. 28 letter from Grayscale Investments to the United States Securities and Exchange Commission (SEC).
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How hedge funds are fighting back against the SEC's 'aggressive' agenda; Funds have taken aim at US regulator's authority in challenge to rule that would have forced greater transparency
Costas Mourselas and Stefania Palma - Financial Times
In February 2022, the chief legal officer of hedge fund Citadel, Shawn Fagan, rang Eugene Scalia, a top lawyer who has made a career out of taking on US regulators. Fagan wanted Scalia's help in challenging a newly aggressive Securities and Exchange Commission, which under chair Gary Gensler was proposing rules that would bring private equity firms and hedge funds - part of a "shadow banking" sector whose rapid growth has alarmed regulators - under closer supervision. It was a natural choice. Fagan had known Scalia for many years, having been a clerk at the US Supreme Court in the days when Eugene's father Antonin Scalia, a conservative justice idolised by Republicans for his steadfast opposition to perceived government over-reach, was on the court. Following the call, Citadel and the other hedge funds and private equity firms opposing the plans decided on a strategy altogether more drastic than simply quibbling about individual aspects of the rule they did not like - challenging in court the SEC's very authority to introduce such regulation.
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SEC Obtains Final Judgment Against Barred Broker Who Posed As A Hedge Fund Manager
SEC
On August 12, 2024, the U.S. District Court for the Eastern District of New York entered a final judgment against Rand Heckler, enjoining him from violating certain provisions of the federal securities laws.
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| | | | | | Strategy | | | When Others Are Fearful, Try This Options Strategy; The "ratio-put spread" strategy is worth considering for investors who want to profit off future stock weakness while pre-positioning to buy a stock at lower prices. Here's how it works.
Steven M. Sears - Barron's
It's OK to be confident and afraid at the same time. Just make sure it happens when you're investing, otherwise you'll freak out other people.
Such duality is best used when benchmark indexes, and your key investments, have been banged up hard, as recently happened when troubles in the yen carry trade rocked global markets. Many investors feared-and some still do-that they were facing a tough reckoning.
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Strategies for Success in a Volatile Environment
tastytrade (Video)
Discussion highlights increased market volatility, emphasizing opportunities for premium sellers due to inflated option prices. Comparing iron condors and strangles in high and low implied volatility (IV) environments, the analysis shows strangles offer significantly higher premiums. The conversation stresses selling neutral positions to collect more premium and protect against downside risk. Traders are advised to use shorter duration options to enhance potential returns. The segment concludes that high IV environments present unique opportunities for option traders.
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Semi-Conductors
Cboe (Video)
Get market updates from @JoeTigay on semi-conductors, upcoming earnings (including $NVDA) and more in #Vol411.
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| | | | | | Miscellaneous | | | Hedge Funds Battle to Turn ChatGPT from Intern to Analyst
Justina Lee - Bloomberg
Chris Pulman used to spend two days prepping previews for central bank meetings. Now it can take the chief economist at Balyasny Asset Management as little as 30 minutes. Thanks to the new amped-up generation of artificial intelligence, chatbots are now carrying out his time-consuming research chores. Everything from summing up the views of Wall Street economists and generating charts to extracting the latest pronouncements from monetary officials, and more. With Pulman's input, the AI program then plugs all that market wisdom into a template to showcase his interest-rate call.
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****** When ChatGPT gets a boat ride at the end of the summer and has too much to drink, then it will have moved from intern to analyst.~JJL
Opinion: Some hedge funds thought AI would help them beat the market. Then things got real.; The Eurekahedge AI Hedge Fund Index has lagged the S&P 500, proving that the machines aren't learning from their investing mistakes
Mark Hulbert - MarketWatch
Investors who fantasize about how much money artificial intelligence (AI) could help them make should study the chart below. It plots the 15-year performance of the Eurekahedge AI Hedge Fund Index, which its creator says "is designed to provide a broad measure of the performance of underlying hedge fund managers who utilize artificial intelligence and machine learning theory in their trading processes."
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