| | | | | | | April 11, 2025 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Trades Before Trump Tariff Post Draw Scrutiny
Alexander Osipovich and Krystal Hur - The Wall Street Journal
Market watchers have been scrutinizing some extremely well-timed options trades just ahead of President Trump's rally-sparking tariff announcement on Wednesday. Shortly after 1 pm ET on Wednesday, volume spiked in bullish call options on State Street's popular SPDR S&P 500 ETF Trust, the index-tracking fund better known by its ticker SPY. The surge in activity took place in options that would pay off if SPY's price rose above $509 that day. At 1:06 pm, for instance, an unknown buyer spent about $21,000 to purchase 101 of the contracts, according to derivatives-data firm SpotGamma. At 1:10 p.m., SPY was trading at about $501-so it would have taken a jump of more than 1.5% for those options contracts to deliver a payday. The trades were in so-called zero-day-to-expiry options, meaning they would have expired worthless within a few hours if markets had dropped.
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***** Also see the Reuters story, Well-timed options trades ahead of Trump's tariff pause draw questions
Bill Ackman Calls Out Triple-Levered ETFs, Zero-Day Options Boom
Vildana Hajric and Katie Greifeld - Bloomberg
Bill Ackman is taking aim at two booming markets beloved by day traders: Highly-leveraged exchange-traded funds and zero-day stock contracts that have become one of the hottest options strategies on Wall Street.
In a series of posts on X, the billionaire investor and founder of Pershing Square Capital Management criticized the heavy use of leverage in markets, asking his 1.7 million followers: "How have 3X leveraged ETFs and Zero Days to Expiration (0DTE) options advanced society or contributed to our economy?"
/jlne.ws/3YsIMPI
Susquehanna leads Series A investment for SpectrAxe; IMC and CTC are also involved as co-investors; the investment is expected to provide greater market access and liquidity depth in the OTC FX options market.
Natasha Cocksedge - The Trade
OTC FX options marketplace SpectrAxe has secured a Series A investment led by Susquehanna International Group, to drive innovation in the FX options trading market.
The funding round, which included Susquehanna Private Equity Investments, LLLP (SPEILLLP), a member of Susquehanna, also saw IMC and CTC participating as co-investors.
/jlne.ws/3Rb8Nzh
A $576 Billion Stock-ETF Juggernaut Hit by Extreme Dislocations
Vildana Hajric and Bernard Goyder - Bloomberg
One of the largest exchange-traded funds in the world was left at the widest premium to its underlying holdings since 2008 at the end of Wednesday's historic session.
In another sign of the frantic trading on Wall Street, the $576 billion SPDR S&P 500 ETF Trust, or SPY, closed roughly 90 basis points above its net-asset value on a day when it surged 10.5% - the most in 16 years - data compiled by Bloomberg show. For comparison, SPY's average dislocation to its NAV over the past decade is just a fraction of a basis point. The early Covid months of 2020 also saw it trade above or below its net-asset value, though none of those gaps were as wide as where Wednesday's ended up.
/jlne.ws/42wGMHG
Hedge funds miss out on US equities rally but suffer smaller losses in volatile two days
Carolina Mandl and Summer Zhen - Reuters
Global equities long/short hedge funds missed out on most of Wednesday's massive rally in U.S. stocks, triggered by President Donald Trump's pause on some tariffs for 90 days, but managed to limit their losses during Thursday's sell-off.
The funds were up 0.98% on April 9, while the S&P 500 index soared 9.5%, according to numbers compiled by Morgan Stanley sent to clients. U.S. hedge funds posted higher gains, up 2.28%, but still underperformed the index.
/jlne.ws/4jsTApa
The Simple Explanation for This Week's Treasury Market Mayhem; While leveraged trades blowing up may have played a small role, traders' search for a boogeyman ignores the obvious
Jon Sindreu - The Wall Street Journal
The Treasury market freaked everyone out this week when yields on longer-term debt shot higher even as stocks were being bludgeoned and the dollar fell. Naturally, traders are wondering why.
The immediate suspects include somewhat plausible ideas revolving around complex trading strategies employed by hedge funds to conspiracy theories focused on nefarious dealings by foreign governments.
/jlne.ws/4jmCjho
Liquidity worsens in $29tn Treasury market as volatility soars
Financial Times
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| | | | | | Exchanges | | | Cboe Hires Derivatives Market Intelligence Director in Asia Push
Cecile Vannucci - Bloomberg
Cboe Global Markets Inc. has hired a director to expand its research and analysis unit in Asia Pacific. Wei Liao will be based in Hong Kong and lead the launch of Cboe's Derivatives Market Intelligence arm in the region, according to a statement from the US exchange. Prior to this role, she was a portfolio manager at CQS Asset Management and founded derivatives-focused hedge fund Watercourse Macro Fund.
/jlne.ws/4i8JKYr
Cboe Expands Derivatives Market Intelligence Franchise into Asia Pacific with Strategic New Hire
Cboe
Cboe Global Markets, Inc. (Cboe: CBOE), the world's leading derivatives and securities exchange network, today announced the continued expansion of its Derivatives Market Intelligence team with the hiring of Wei Liao as Director, Derivatives Market Intelligence. Based in Hong Kong, Ms. Liao will lead the buildout of Cboe's derivatives market intelligence and content franchise in Asia Pacific (APAC), with a focus on delivering high-impact, data-driven insights to clients in the region. This initiative furthers Cboe's international expansion of its Global Derivatives business, strengthening its presence and client engagement across the U.S., Europe and APAC to meet growing demand.
/jlne.ws/3G4KwbO
25 years of ETFs in Europe: Comprehensive set of measures to promote ETF trading on Xetra
Deutsche Borse
Deutsche Borse is celebrating the 25th anniversary of exchange-traded funds (ETFs) in Europe today. On 11 April 2000, Deutsche Börse became the first stock exchange in Europe to introduce trading in ETFs, thus setting a milestone in the financial industry. Since the start of trading of the first two products in Europe, two ETFs on European stock indices of the STOXX index family, the market for ETFs has developed rapidly. Today, investors can choose from over 2,400 ETFs on Xetra, the largest range of listed ETFs in Europe. At the start of the anniversary year, Deutsche Börse's ETF segment recorded the strongest quarter in its history. With an average monthly trading volume of EUR28.5 billion in the first three months of the year, turnover was 61.3 per cent above the monthly average of the previous year (EUR17.7 billion). This means that Xetra remains the leading stock exchange trading venue for ETFs in Europe.
/jlne.ws/4jsAZth
Deutsche Borse reduces settlement fees for centrally cleared ETF transactions on Xetra
Maria Nikolova - FX Newsgroup
To increase post-trade efficiency, Deutsche Börse has implemented a significant reduction in settlement fees for centrally cleared ETF transactions on Xetra together with Clearstream, Deutsche Börse Group's post-trade service provider. As a result, trading participants will benefit from significant cost advantages in the settlement of their ETF transactions from 1 May 2025. The aim of this measure is to further strengthen on-exchange ETF trading along the entire value chain.
/jlne.ws/3XUAHDw
| | | | | | Regulation & Enforcement | | | Newly Confirmed SEC Chair Paul Atkins Will Endanger Investors, Markets, and the Economy, As He Did Before the 2008 Crash
Better Markets
Dennis M. Kelleher, Co-founder, President, and CEO, issued the following statement after the Senate confirmed Paul Atkins to be Chair of the Securities and Exchange Commission (SEC): "As the U.S. financial markets experience extreme stress and volatility due to erratic policy announcements by the President, the American people need an independent SEC Chair who will be vigilant in supervising and policing those markets to protect investors and prevent crashes. Unfortunately, the newly confirmed SEC Chair Paul Atkins will likely do the opposite and at the worst possible time. "Atkins can be expected to take orders from the White House, politicize the SEC, mindlessly cut key staff, deregulate the industry, gut the enforcement professionals, side with management over investors, and generally undermine the mission and mandate of the SEC. As happened when he was an SEC Commissioner from 2002-2008, Wall Street's megafirms and politically favored companies will be protected while investors will be left to protect themselves.
/jlne.ws/42hhVqY
| | | | | | Strategy | | | 'Market lows are in': Piper Sandler makes bold call - and shares where to invest
William Edwards - Business Insider
The stock-market sell-off has bottomed out as uncertainty falls, says Michael Kantrowitz.
The Piper Sandler strategist likes high-quality stocks.
But some experts remain cautious; recession risks persist despite market optimism.
The stock-market sell-off has bottomed out, Piper Sandler strategist Michael Kantrowitz says.
Kantrowitz made the call in a client note on Wednesday afternoon, after Trump's postponement of his "reciprocal" tariffs launched a furious S&P 500 rally. It has turned out to be a bold prediction: the market melted down again on Thursday, with the S&P 500 down 5% as of 12:45 p.m ET.
The reasoning behind Kantrowitz's call is that uncertainty levels will start to fall from here.
/jlne.ws/3Yr17Na
| | | | | | Miscellaneous | | | US 30-Year Bond Auction Abates Worst Fears of a Buyers' Strike
Ye Xie and Carter Johnson - Bloomberg
Investors in the $29 trillion Treasury market got a welcome dose of stability after an auction of 30-year bonds was met with strong demand. Longer-dated Treasuries pared their earlier losses after investors snapped up $22 billion of US government debt sold on Thursday, with 30-year yields lingering near 4.83%. Shorter-term notes, meanwhile, kept up a rally spurred by evidence that underlying US inflation ebbed last month.
/jlne.ws/4lqWmNx
**** As the headline says, my fears have been "abated." However, as Bloomberg reports, "US Bonds Have Never Lost Out This Much to German Bunds in a Rout." ~JJL
Inside the bond market's $800 billion 'murder mystery.' Here's why the basis trade could be a time bomb-and what the Fed can do to stop it
Greg McKenna - Fortune
Investors are looking to pick up the pieces after President Donald Trump announced a 90-day pause to the sweeping "reciprocal tariffs" that sent stocks plunging, but many on Wall Street suspect chaos in the bond market truly forced the administration's hand. A confounding spike in yields sparked fears of a liquidity crisis, and the collapse of the so-called "basis trade" may have been one of the main culprits. In normal times, hedge funds borrow heavily to take advantage of tiny price discrepancies between Treasuries and futures linked to those bonds. They profit handsomely and, in turn, help keep money markets humming. The COVID-19 pandemic and recent trade policy upheaval have shown what can happen when the $800 billion trade unwinds, however, and some experts think the Federal Reserve needs to be better equipped to handle the next potential crisis in, say, three months or so.
/jlne.ws/43R2xUY
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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
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