| March 28, 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.
| | | | | | Lead Stories | | | The Options Trader Who Bet Against Lehman, Then Signature Bank
Gunjan Banerji - WSJ
It's not the first time Andrew Bissell has tried to profit from a banking crisis.
Mr. Bissell, 39, says he remembers positioning for a fall in shares of American International Group and Lehman Brothers around the time of the 2008 financial crisis, when he was first getting into options trading.
Fifteen years later, he notched a big win buying put options tied to Signature Bank, which regulators shut down in March after a bank run. The firm catered to a quirky mix of customers that fueled its rise and, eventually, led to its fall.
/jlne.ws/3JQvyEn
Bets Against Signature Bank Stock Paid Offâon Paper, at Least
Gunjan Banerji - WSJ
For options traders, betting that shares of Signature Bank and SVB Financial Group would plummet was the easy part. Trying to cash out has been harderâand, for many, unexpectedly costly.
The banks failed two weeks ago and were taken over by regulators, which essentially wiped out the value of their shares. That is an outcome that should be good news for investors owning puts, options that confer the right to sell shares at a stated price by a certain date.
/jlne.ws/3TStH6x
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
Retail Options Trading Is Increasing the Volatility of Securities
Larry Swedroe - Wealth Management
For Wall Street firms, retail traders are attractive market participants because they tend to be less informed about underlying security values and the true trading costs they might be incurring. To take advantage of the retail market, broker-dealers design strategies (such as low-fee and no-fee trading platforms) to increase retail trading. Trading in equity options is particularly attractive to individual investors because of its considerable embedded leverage and the opportunity it presents for lottery-like wins. The marketing strategies have been successful, as retail trading in options has grown from $20 billion in 2010 to $240 billion in 2020.
/jlne.ws/3zkQdeR
Recession isn't a guaranteed stock-market crusher, owing to this one truth about volatility and GDP
Mark Hulbert - MarketWatch
While an economic recession carries huge repercussions, the ups and downs of the U.S. economy have little to do with the U.S. stock market's gyrations.
Every day I review the latest newsletters and research reports from more than 100 investment advisers and Wall Street firms. It's rare for even one of them not to focus on the prospects for a "soft landing" or, if the Federal Reserve fails, when the recession will begin and how severe it will be. What few, if any, seem to appreciate is that as far as their stock market recommendations go, their analysis signifies next to nothing.
/jlne.ws/3lJwDWP
The Wild Run for Oil Prices Continues
David Uberti - WSJ
U.S. crude extended its volatile run Monday, logging its sharpest price gain in nearly six months.
The domestic benchmark jumped 5.1% to $72.81 a barrel, its largest one-day percentage increase since Oct. 3 according to Dow Jones Market Data.
/jlne.ws/40nJHA6
| | | | | | Exchanges | | | ETD Volume - February 2023
FIA
This month FIA is releasing the February data on futures and options trading in two formats: the established spreadsheet format and a new format called the FIA ETD Tracker. The ETD Tracker consists of interactive visualizations on the FIA website that allow users to view data on volume and open interest, with filters based on year and month, region and jurisdiction, asset group and type of product. The ETD Tracker also includes visualizations that rank exchanges by total volume in the latest month and year to date as well as open interest in the latest month.
/jlne.ws/40uLAv2
Exotic Derivatives Options Platform Cega Raises $5 Million
Michael Abadha - InvestingCube
Cega, a DeFi-centric derivatives platform specializing in exotic options, has announced a $5 million raise led by Dragonfly Capital, Pantera Capital, and Robot Ventures. Having raised $4.3 million in its initial seed round in March 2022, it means that the protocol's total capital raise to date is $9.3 million. The funding was conducted through the use of a Simple Agreement for Future Equity and a companion side letter.
/jlne.ws/3nqVvD2
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
Execution of the Compression Trades for Nikkei 225 Options
JPX
Osaka Exchange (OSE) announced that the compression trades for Nikkei 225 Options (powered by TriOptima AB) * were executed during the Night Session on March 27th (Trading date March 28th). In this cycle, total of 377 contracts (JPY10.4 billion in notional amount) were traded.
/jlne.ws/40nw43Y
| | | | | | Regulation & Enforcement | | | CFTC Chairman: Binance Was 'Ongoing Fraud'
Dave Michaels - WSJ
Binance's ongoing efforts to evade U.S. rules and let Americans use its offshore crypto exchange was part of an "ongoing fraud," Commodity Futures Trading Commission Chairman Rostin Behnam said Tuesday.
/jlne.ws/3TQg4F2
CFTC Charges Binance and Its Founder, Changpeng Zhao, with Willful Evasion of Federal Law and Operating an Illegal Digital Asset Derivatives Exchange
CFTC
The Commodity Futures Trading Commission today announced it has filed a civil enforcement action in the U.S. District Court for the Northern District of Illinois charging Changpeng Zhao and three entities that operate the Binance platform with numerous violations of the Commodity Exchange Act (CEA) and CFTC regulations. The complaint also charges Samuel Lim, Binance's former chief compliance officer, with aiding and abetting Binance's violations.
/jlne.ws/3JTuj7H
| | | | | | Strategy | | | Summer Doldrums Approaching
Cboe (Video)
Tim Biggam @Delta_Desk on some contango in the $VIX term structure and a slow decline in implied volatility, all in #Vol411. $SPX #options #optionstrading
/jlne.ws/3lJDX4L
| | | | | | Miscellaneous | | | Banking Crisis: 2008 Scenario Looks Better, But Brace for Volatility
John Authers - Bloomberg
The absence of new tidings is good as far as it goes. A weekend with no bad news would have been just great during the last three months of 2008. But it's intriguing how much the quiet weekend seems to have spurred the rest of the market. With no other obvious economic events or data (although there are plenty to come in the next few days), the implicit fed funds rate for the end of this year somehow rose Monday to 4.21%. At one point on Friday it was 3.65%. Somehow, the risk that a bank slowdown causes a recession and drives the Federal Reserve off course has been perceived to reduce significantly in a few days of masterly inactivity. Huge shifts in sentiment about monetary policy continue, then, and they appear to be driven primarily by the fate of regional banks.
/jlne.ws/3lGqg6E
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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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| | | Jeff Bergstrom
Editor
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