| August 14, 2023 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Option Volatility And Earnings Report For August 14 - 18
Gavin McMaster - Barchart
Earnings season is starting to slow down, but we still have a few big names reporting including Walmart (WMT), Deere (DE) and Home Depot (HD). Before a company reports earnings, implied volatility is usually high because the market is unsure about the outcome of the report. Speculators and hedgers create huge demand for the company's options which increases the implied volatility, and therefore, the price of options. After the earnings announcement, implied volatility usually drops back down to normal levels.
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Options Trading Threatens 2023's Stock Market Calm: What You Need to Know
Investing.com
Deep in the world of options trading, a threat to the year's consistent stock-market calm has emerged. Although the benchmark indexes have shown minimal change, the daily shifts in the S&P 500 reveal increased volatility, the highest since June. One catalyst for this uncertainty is the economic ambiguity and the policies of central banks. However, a more significant driver might be market makers adjusting their positions. These Wall Street dealers, with the power to move millions of shares for hedging, have now positioned themselves in a manner that could amplify market fluctuations.
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Burry, famous for 'Big Short,' bought bearish options against S&P, Nasdaq 100
David Randall and Saqib Iqbal Ahmed - Reuters
Michael Burry, the money manager made famous in the book and film "The Big Short," held bearish options against the broad S&P 500 and Nasdaq 100 Index at the end of the second quarter, according to securities fillings released on Monday. Burry's Scion Asset Management bought put options with a notional value of $739 million against the popular Invesco QQQ Trust ETF (QQQ.O) during the quarter, and separate put options with a notional value of $886 million against the SPDR S&P 500 ETF (SPY.P). Put options convey the right to sell shares at a fixed price in the future and are typically bought to express a bearish or defensive view. Burry rose to fame with his bets against the U.S. housing market before the 2008 financial crisis.
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VIX drop suggests calm equity market sentiment
Larry Rothman - Pensions & Investments
The Cboe Volatility index stood at 14.84 as of Aug. 11, down from 22.9 at the start of the year. The VIX briefly spiked to over 26 in mid-March after regional banks such as Silicon Valley Bank ran into trouble. This year, the daily VIX averaged 17.79, below the 19.63 average from 1990 to 2023. It spiked to 25.64 in 2022 when markets underwent a challenging period that saw the S&P 500 level falter by 19.4%.
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Wake-up call for sanguine investors
The News International
The slide in US bank stocks this week appeared to catch traders in the options market by surprise, data shows, raising questions over whether bank investors have become a little too comfortable with the sector that only months ago was in crisis. U.S. bank shares dropped on Tuesday after ratings agency Moody's downgraded credit ratings of several U.S. regional lenders and placed some banking giants on review for potential downgrade. It warned lenders will find it harder to make money as interest rates remain high, funding costs climb and a potential recession looms. It also cited some lenders' exposure to commercial real estate as a risk. The warning caught some investors off guard.
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| | | | | | Exchanges | | | CME Group Foundation Awards 2023 Higher Education Scholarships to Rising Black and Latinx Students
CME Group
CME Group Foundation today announced that 18 rising Black and Latinx students majoring in finance, technology and related fields at 11 partner colleges and universities in Illinois have each been awarded $20,000 in scholarships to further their education. With this addition, CME Group Foundation is currently providing scholarships to 33 college students for the 2023-24 academic year.
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MIAX Sapphire Options Exchange Releases Technical Documents
MarketsMedia
As previously announced in our May 1, 2023 Alert, the target launch date for the MIAX Sapphire Options electronic exchange is Q1 2024, pending SEC approval. Technical documents, website support, important dates and exchange code information for the MIAX Sapphire Options Exchange are included below. The MIAX Express Network Interconnect Connectivity Guide now includes information for the MIAX Sapphire Options Exchange and can be found on the MIAX website at MIAX Connectivity Guide.
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Fake $1 billion OpenAI investment news appears on London Stock Exchange website
Simon Hunt - Evening Standard
A US private equity business was today shocked after a fake press release appeared on the London Stock Exchange website alleging that the firm was planning to invest $1 billion into ChatGPT owner OpenAI. The announcement, which appeared on the LSE's regulatory news site, claimed that New York-based Ripplewood "would like to set up the software as a driving force in the fund" and that "in the event of a possible IPO a ChatGPT stake is a giant valuable asset...[a] bargain for investors."
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| | | | | | Technology | | | Tradier Launches The Tradier Hub to Better Serve Today's Active Retail Investors Seeking Choice, Live Education & Community
StreetInsider.com
Tradier, Inc. a leading cloud based global financial services technology provider serving active traders through API-powered platforms and partnerships through its subsidiary Tradier Brokerage, Inc, today announced the launch of The Tradier Hub, a first-of-its-kind platform that combines what advanced traders seek from multiple locations into one.
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| | | | | | Strategy | | | Validus debuts S&P 500 dynamic put-write ETF
James Lord, CFA - ETF Strategy
Validus Risk Management has made its ETF debut with the launch of a rules-based put-write strategy based on the S&P 500 that is designed to help improve investors' long-term risk-adjusted exposure to US large-cap equities. The Cboe Validus S&P 500 Dynamic PutWrite Fund (PUTD US) has been listed on Cboe BZX Exchange with an expense ratio of 0.60%. The ETF is linked to the Cboe Validus S&P 500 Dynamic PutWrite Index which Validus developed in collaboration with derivatives exchange and options investing specialist Cboe. The index essentially delivers a cash-secured put-write strategy which involves selling put options on the S&P 500 while simultaneously holding enough cash or cash equivalent securities (such as Treasury bills) in an amount equal to the maximum possible loss of the short put positions.
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Two Covered Call ETFs I Like Better Than QYLD; Looking for high monthly income? These ETFs could be a good alternative or complement to QYLD.
Tony Dong - The Street
Investing in exchange-traded funds (ETFs) that utilize a covered call strategy can be an appealing choice for many investors. The allure lies in their potential to generate additional income through the premiums earned by selling call options, offering a steady income stream on top of dividends. A classic example of such an ETF is the Global X NASDAQ 100 Covered Call ETF (QYLD), which currently stands as Global X ETFs' largest fund in terms of assets under management and has become a poster child of sorts for the covered call ETF industry. Yet, despite its popularity and widespread recognition, QYLD is not the only player in this field. Nor is it necessarily the best option for every investor.
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| | | | | | Events | | | Futures & Options Expo
FIA
Whether you're a trader chasing the latest data and trends affecting the markets or a back office manager seeking ways to increase operational efficiency or a business strategist looking for what's next, you'll find your answers at Expo. From sessions featuring exchange leaders, industry experts and key regulators to the exhibit hall that brings opportunities and solutions to the forefront, you'll get everything you need at Expo.
Join us on 2-3 October back at the Sheraton Grand Chicago Riverwalk for Expo 2023. Save on registration through 1 September!
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| | | | | | Miscellaneous | | | Interactive Brokers Option Trading Requirements: Everything You Need to Know
NNN
When it comes to options trading, Interactive Brokers is a well-established and popular platform among traders. But before you delve into the exciting world of option trading, it's important to understand the requirements set by Interactive Brokers. This comprehensive guide will walk you through everything you need to know about Interactive Brokers option trading requirements. Key Takeaway The Interactive Brokers option trading requirements involve certain criteria relating to trading experience, margin, options knowledge, and financial stability. Meeting these requirements ensures that you have the necessary skills and resources to engage in options trading on their platform.
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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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