| October 31, 2024 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | Yesterday JLN published a video interview we shot for The Path to Electronic Trading that got lost in the archives and was never published. It is an important piece that involves someone whose career has spanned from the 1960s computing to today, from paper ticket creation to blockchain. John Rapa, the managing director and CEO of Tellefsen & Company, LLC, filled in a lot of blanks for us, once we finally put all the pieces together in a cumulative video.
The video was actually shot in 2021 and we should have published it earlier. I apologize for not doing so, especially to John. But here is his story.
The Wall Street Journal has story this morning about something JLN has been reporting on, titled "Meet the Wall Street Bigwig Who Has Become Trump's Headhunter in Chief" with the subheadline "Howard Lutnick, the CEO who rebuilt Cantor Fitzgerald, is finding thousands of potential employees for a new Trump administration."
The story tells how Lutnick, the CEO of Cantor Fitzgerald, is leading efforts to recruit potential staff for a possible second Trump administration. Known for rebuilding his firm after the 9/11 tragedy that killed 658 of his employees, Lutnick has now aligned with Trump's inner circle, including figures like Elon Musk, to support the campaign and streamline government efficiency if Trump wins. Appointed as co-chair of Trump's transition team, Lutnick is assembling shortlists for key government roles, focusing on loyalty to Trump's policies. Having raised significant campaign funds for Trump, Lutnick's commitment is also personal, as he joins Musk in proposing a "Department of Government Efficiency" to cut waste from federal budgets. ~JJL
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From Punch Cards to Crypto: One Man's Journey Through Wall Street's Tech Revolution
JohnLothianNews.com
John Rapa never imagined his part-time college job would lead to a front-row seat for Wall Street's technological transformation. But over five decades, he's witnessed the industry's evolution from paper tickets to blockchain - and he's still grappling with how to explain Bitcoin to his grandparents.
Watch the video »
| | | | | | Lead Stories | | | U.S. Election 2024: What the Options Data Says
Henry Schwartz - Cboe
Listed options serve multiple purposes in today's financial markets, from basic hedging and income overlays to quantitative investing strategies and even as the foundation for an entire ecosystem of structured products and defined-outcome exchange traded funds (ETFs). Another crucial benefit comes from the insight the options markets provide into forward-looking expectations and sentiment, aiding decision-making for traders and non-traders alike.
A unique feature of the U.S. election taking place on November 5, 2024, is the availability of index options with daily expiration cycles in the days leading up to, and after, the event. While the popular Cboe Volatility Index (the VIX Index) gauges market volatility expectations on a 30-day time horizon, daily options enable volatility estimates at a finer granularity, making it possible to isolate market expectations around a significant event, like the election.
/jlne.ws/3YM8EqG
CME bitcoin options volume surges amid bullish derivatives bets ahead of US election
Brian McGleenon - The Block
The trading volume of CME options on bitcoin futures has increased ahead of the U.S. election, with some large trades suggesting that institutional investors are preparing for significant price moves in the days after Americans go to the polls on November 5.
Arbelos Markets CEO Joshua Lim told The Block that sizable derivatives trades are betting on bitcoin's price surging above $85,000 by the end of November. Lim cited one example: a purchase of 3,050 bitcoin units in options set to expire on November 29, with a strike price of $85,000. This trade involved a $4.6 million premium, with $173,000 of vega and $42 million of delta - suggesting that if bitcoin's price approaches or surpasses the $85,000 mark, the value of these options could quickly increase. The high premium indicates institutional traders are confidently wagering that bitcoin's price will exceed the $85,000 strike by the end of November.
/jlne.ws/4hvgTOU
Currency Traders Are Positioning for Global Surge in Volatility; Dollar hedging over the next week costs most since March 2020; Yuan, Mexican peso among most sensitive currencies to election
Vassilis Karamanis - Bloomberg
Traders are preparing for a surge in currency volatility around the world after the cost of hedging dollar moves over the next week climbed to the most expensive since early 2020. The options market shows investors expect to see big price swings in Group-of-10 currencies, particularly in Japan's yen, the Norwegian krone and New Zealand's dollar. The Mexican peso, the Chinese yuan and South Korea's won also look vulnerable.
/jlne.ws/4huKDLM
Bond Traders Hedge Deeper Selloff, Targeting US 10-Year Yield at 4.5%
Edward Bolingbroke - Bloomberg
A bearish tone is taking hold in Treasury options as traders bet that a crucial stretch ahead - with the US presidential election just days away - will deepen losses in bonds and spark bouts of increased volatility. Yields have already surged this month, in part on speculation that the winner of the Nov. 5 vote will boost fiscal stimulus, spurring quicker growth and inflation and swelling the supply of Treasuries.
/jlne.ws/40o2s9h
BlackRock's Bitcoin ETF Gets Record Inflow Ahead of US Election; Net $872 million poured into the world's biggest Bitcoin fund; Largest digital asset is on the verge of setting a record high
Sidhartha Shukla - Bloomberg
BlackRock Inc.'s Bitcoin fund posted an unprecedented net inflow as speculation over how the US election may play out stirs demand for the largest digital asset. Some $872 million poured into the iShares Bitcoin Trust exchange-traded fund on Wednesday, a daily record, data compiled by Bloomberg show. Subscriptions for the nine-month-old product in 2024 are among the highest for ETFs globally.
/jlne.ws/3NOf16A
BlackRock's Entry Into Crypto Matters More Than U.S. Election, QCP Capital's Darius Sit Says
Sam Reynolds - CoinDesk
The winner of next week's U.S. presidential election doesn't really matter to Darius Sit, the chief investment officer of QCP Capital, a Singapore-based crypto trading firm. While there may be some short-term volatility in crypto markets depending on whether Donald Trump or Kamala Harris becomes the leader of the world's largest economy, what's more important is the broader integration of crypto, especially bitcoin (BTC), into American finance. For example, the widespread adoption of bitcoin exchange-traded funds (ETFs), with BlackRock (BLK), the world's largest asset-management firm, running the biggest.
/jlne.ws/3YJmI3X
| | | | | | Exchanges | | | Robinhood earnings disappoint Wall Street despite company's upward trajectory; The online brokerage's third-quarter earnings missed analyst forecasts for both revenue and earnings per share
Gordon Gottsegen - MarketWatch
Despite pulling in more revenue over its past three quarters than it had in any other full year, online brokerage Robinhood Markets Inc. saw its shares slide in extended trading Wednesday after reporting its third-quarter earnings.
Robinhood announced adjusted earnings per share of 17 cents and $637 million in revenue after the closing bell - figures that fell short of the 18 cents and $661 million, respectively, that analysts had expected, according to FactSet.
/jlne.ws/4f7uxGo
Tradeweb to extend trading hours the day after US election
Reuters
Bond trading platform Tradeweb plans to extend trading hours on Nov. 6, the day after the U.S. presidential election, and offer overnight support on Election Day.
"We are providing overnight operational support and some early trading hours to cover the U.S. Presidential Election," it said in an email to clients on Thursday.
/jlne.ws/4f7IO61
Henry Hub Futures Reach Record Open Interest as International Demand Soars
CME Group
CME Group, the world's leading derivatives marketplace, today announced that open interest in its global benchmark Henry Hub futures contract reached a record 1.73 million contracts on October 30, 2024 as international participation is at all-time highs.
"As the U.S. exports record levels of LNG to supply Europe and Asia, Henry Hub remains the most important price reference in global gas markets," said Peter Keavey, Global Head of Energy and Environmental Products at CME Group. "Henry Hub is the largest and most liquid global gas benchmark, with a record 25% of total trading originating outside of the U.S. this year."
/jlne.ws/3NKEMVj
| | | | | | Regulation & Enforcement | | | Nasdaq and Cboe Challenge SEC Over Updated Stock Trading Rule; Exchanges say changes could affect pricing and hurt investors; US regulator had passed new rule altering economics of trading
Katherine Doherty and Lydia Beyoud - Bloomberg
Nasdaq Inc. and Cboe Global Markets Inc., two of the biggest stock exchanges, challenged a new US Securities and Exchange Commission rule that changes the economic structure of how stocks trade.
The firms asked a court to review the SEC's recently finalized national market structure regulation, also known as Reg-NMS, according to a petition, which they said was lodged with a United States appeals court in Washington.
/jlne.ws/4f440tz
| | | | | | Technology | | | Zayo to Deliver Connectivity to New MIAX Sapphire Options Physical Trading Floor; High-performance network solutions to support Miami's growing role as a global financial hub
BusinessWire
Zayo, a leading communications infrastructure provider, today announced it will deliver ultra-low-latency, high-bandwidth connectivity to Miami International Holdings, Inc.'s (MIH) newest U.S. multi-listed options exchange, MIAX Sapphireâ¢, when the exchange opens its physical trading floor in Miami in 2025. MIAX Sapphire will be the first national securities exchange to establish operations in Miami when it opens next year. As Miami emerges as 'Wall Street South,' Zayo's connectivity to MIAX Sapphire and network expansion in the Miami market will ensure seamless, scalable and secure connectivity to help financial customers compete.
/jlne.ws/4f6R46b
| | | | | | Strategy | | | Opinion: This stock-option strategy can give you a winning trade around the presidential election; A plan to lock in a profit no matter how the S&P 500 reacts after Election Day
Lawrence G. McMillan - MarketWatch
The S&P 500 (SPX) continues to trade in a narrow range between 5,760 and 5,870 as it waits for the U.S. presidential election on Nov. 5. A breakout above 5,870 would represent new all-time highs and would be extremely bullish. A close below 5,670 would be bearish and would trigger substantial selling.
Technically, the McMillan volatility band (MVB) buy signal from early August is still in place. Our position has been rolled up several times. The target for this trade is the +4Ï "modified Bollinger Band," which is at about 5.920.
/jlne.ws/3UvQUgE
The Market's Fear Gauge Is Rising
Jacob Sonenshine - Barron's
Stock market volatility is spiking.
The Cboe Volatility Index, the market's "fear gauge," is up 10% to just over 22. Its long-term average is below 15. This comes as the major U.S. indexes are firmly lower.
/jlne.ws/3YlyujK
Options Traders Ready for Sharp Stock Moves in India on US Vote; Weekly Nifty 50, 24,500 calls, 24,400 puts among most owned; Traders are buying strangles to bet on volatility, Bhatt says
Savio Shetty - Bloomberg
Options traders are betting the US election will trigger a wild move in the Indian stock market.
Among the NSE Nifty 50 Index options expiring next week after the vote, calls with an exercise level of 24,500 and 24,400 puts have added more than 60,000 contracts each in the past week, becoming some of the most owned, data compiled by the local exchange and Bloomberg show. This means market players are likely buying strangles - a strategy to wager on volatility - as they position for a "sharp move on either side," according to Avani Bhatt, senior vice president at JM Financial.
/jlne.ws/3AbCPy1
| | | | | | Miscellaneous | | | Polymarket's Influence on Wall Street's Election 'Game Plan' Grows Despite Red Flags; Crypto exchange anchors election views, portfolio manager says; JPMorgan assesses betting site's odds for long-short strategy
Alexandra Semenova and Vildana Hajric - Bloomberg
Despite widespread skepticism about how much trust investors should place in the signals being sent by cryptocurrency-based predictions market Polymarket, Wall Street is paying close attention to betting on the platform that shows a high chance Donald Trump will win the US presidential election. While naysayers argue that outsized bets and pro-crypto bias can skew the probabilities being presented on the site, some smart-money traders and strategists are following Polymarket very closely. Vice President Kamala Harris and former President Trump are basically in a dead heat ahead of the Nov. 5 election based on recent polling, yet wagers on Polymarket indicate a 67% probability that Trump will win.
/jlne.ws/3UvglyQ
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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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