| May 03, 2023 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | US regional bank stocks draw bearish options bets despite bounce
Laura Matthews and Saqib Iqbal Ahmed - Reuters
The cost of insuring against further losses in regional U.S. bank stocks stood near a one-month high in options markets on Wednesday, even as shares of lenders saw a reprieve from their recent sell-off.
The 30-day implied volatility on the SPDR S&P Regional Banking ETF , which measures traders' expectation for near-term price swings, stood at 46 on Wednesday, just shy of the one-month high of 47 hit on Tuesday, signaling little letup in investor fears despite JPMorgan Chase & Co's (JPM.N) weekend rescue of First Republic Bank (FRC.N).
/jlne.ws/422wQnF
****JB: Also read The Wall Street Journal story, Options Bets Against Banks Surged Ahead of Fed Meeting.
US investor interest in China cools as political tensions grow; Trading activity in US options tracking Chinese stocks slows after hitting record last year
Nicholas Megaw and Madison Darbyshire and Hudson Lockett - Financial Times
US investor interest in Chinese stocks has cooled significantly after hitting a record late last year, as political tensions between the two countries grow. News of China's impending reopening from coronavirus pandemic restrictions late last year prompted a brief burst of enthusiasm for Chinese stock markets after years of underperformance on hopes of an uptick in economic growth. But trading activity has fallen back this year, according to fund managers and trading data.
/jlne.ws/3HBraJ4
Bid to Launch ETFs That Aim to Double Tesla's Famous Volatility Filed With SEC; Past tries at double-leveraged, single-stock ETFs have failed; Tesla-focused ETFs command the bulk of assets in new category
Vildana Hajric and Katherine Greifeld - Bloomberg
A long-shot bid to launch double-leveraged, single-stock exchange-traded funds tracking the notoriously volatile Tesla Inc. has been filed with US regulators after past attempts have failed. The T-Rex 2X Long Tesla Daily Target ETF would trade under the ticker TSLT and use derivatives to track twice the daily returns of Elon Musk's electric-vehicle maker, according to a Tuesday filing.
/jlne.ws/3HwIoY0
Short Sellers Tightened Grip on Regional Banks in Runup to Rout
Vildana Hajric - Bloomberg
Bearish bets on regional banks jumped appreciably in the last week and hedge fund shorts were part of the initial surge in selling as the group's shares dropped Tuesday morning.
Short interest as a percentage of shares outstanding in the SPDR S&P Regional Banking ETF (ticker KRE) rose to 96% from 74% a week ago, according to data compiled by S3 Partners. When accounting for the synthetic long bets created in each short sale, it means almost 50% of positions in the ETF are wagering on a decline. That number climbed from 42% last Tuesday.
/jlne.ws/3p4hII2
Mohamed El-Erian: Here's How the Fed Can Curb Stock Market Volatility
Morgan Chittum - Markets Insider
The Federal Reserve is expected to deliver another interest rate hike on Wednesday, with chair Jerome Powell holding a press conference on the US central bank's policy decision right after.
Often, the meeting and press conference from Powell are followed by large price swings in the market as investors try to digest what's next for the economy.
/jlne.ws/42jWjca
Why stock-market bulls might not celebrate for long if Fed 'pauses' rate hikes
William Watts - MarketWatch
Investors on Wednesday will be looking for signs the Federal Reserve is ready to call at least a temporary halt to further interest rate increases after it delivers what's expected to be a 10th straight hike. But that might not be enough to give the stock market a lasting lift, market watchers warned.
"A pause and likely end of the Fed rate hiking cycle isn't a boon to risk assets, since it's already largely priced in across financial markets," said Jason Draho, head of asset allocation, Americas, at UBS Global Wealth Management, in a note earlier this week.
/jlne.ws/3HBkTNF
| | | | | | Exchanges | | | OCC Clears 764.3M Contracts in April 2023, down 2.4% Year-Over-Year
Options Clearing Corporation
OCC, the world's largest equity derivatives clearing organization, announced today that year-to-date average daily volume through April 2023 was 44.9 million contracts, up 7.2 percent compared to year-to-date average daily volume through April 2022. Total volume was 764.3 million contracts, down 2.4 percent compared to April 2022.
/jlne.ws/3Vuc664
SwapsInfo First Quarter of 2023 Review: Summary
International Swaps and Derivatives Association
The latest ISDA SwapsInfo Quarterly Review shows that interest rate derivatives (IRD) traded notional and trade count increased in the first quarter of 2023 compared to the first quarter of 2022, while index credit derivatives trading activity declined over the same period. This summary provides a high-level overview of key trends for the first quarter of 2023. The full report will be published in due course.
/jlne.ws/3Hyul4g
Coinbase Opens Offshore Crypto Derivatives Exchange
Danny Nelson - CoinDesk
U.S.-based crypto trading firm Coinbase is opening a derivatives exchange in Bermuda as part of an international expansion plan that comes as the publicly traded firm faces regulatory headwinds at home. Called Coinbase International Exchange, the new facility will initially let traders bet on the price of bitcoin and ether via perpetual futures contracts with up to five times leverage and all trades will settle in the stablecoin USDC. In a blog post Coinbase said trading has begun.
/jlne.ws/41WplP6
Farmer sentiment improves; less pessimism over interest rates
CME Group
Farmer sentiment improved modestly in April as the Purdue University/CME Group Ag Economy Barometer rose 6 points to a reading of 123. Both of the barometer's sub-indices were also higher in April, the Current Conditions Index was up 3 points to 129 and the Future Expectations Index was up 7 points to 120. The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers' responses to a telephone survey. This month's survey was conducted between April 10-14.
/jlne.ws/3AKhloy
| | | | | | Regulation & Enforcement | | | Options Market Eyes SEC Equity Proposals
Markets Media
Compliance in Focus is a content series on regulatory topics for financial markets and the challenges compliance officers face in addressing surveillance and monitoring. Compliance in Focus is produced in collaboration with Eventus. The U.S. Securities and Exchange Commission's equity market structure proposals changes were assessed April 26 at the Options Industry Conference in Nashville. Market Structure: Change on the Horizon panelists noted that regulators historically have been amenable to transporting equity rules over to the options market, so the equity proposals currently on the table are important for their potential direct implications for options trade handlers and market operators.
/jlne.ws/3nneajq
Coinbase Grew Quickly by Working With U.S. Regulators. Will It Expand Even More by Disregarding the SEC?
Daniel Kuhn - CoinDesk
Coinbase has launched a new derivatives exchange in Bermuda, a totemic act showing the largest U.S. crypto exchange means business when it says U.S. crypto regulations are increasingly nonviable. The exchange, which has been publicly feuding with the U.S. Securities and Exchange Commission (SEC) over a range of issues, received its license to operate in the island nation last month as it looks to test the international waters.
/jlne.ws/42kfgeF
New SEC Rule Gives Big Hedge Funds 3 Days to Report Major Losses
Lydia Beyoud - Bloomberg
Large hedge funds will have just three days to privately tell US regulators about extraordinary investment losses and major margin events under a new rule from the Securities and Exchange Commission.
The regulation, which a majority of the SEC's five commissioners adopted on Wednesday, significantly ramps up oversight of the biggest hedge funds. Rather than quarterly snapshots, watchdogs would for the first time get an almost real-time look at major events at managers that oversee at least $1.5 billion in assets. Private equity firms will also face new reporting requirements.
/jlne.ws/3Lyo1es
| | | | | | Strategy | | | The Debt-Ceiling Standoff Will Create Panic in the Stock Market. How to Profit From It.
Steven M. Sears - Barron's
The volatility opera has begun.
Rather than panicking that the U.S. government may run out of money in early June, do something more than watch TV and complain about America's poisoned politics.
Long-term investors could monetize these increasingly widespread fears that America might default on its debts for the first time ever by using options to enhance positions in blue-chip stocks.
/jlne.ws/44rGIJh
Pullback In The Market
Cboe (Video)
Tim Biggam @Delta_Desk updates us on $VIX index, #options, #futures, and takes a look at #Fed and #earnings. #Vol411
/jlne.ws/3nlOIuD
| | | | | | Events | | | ISDA Annual General Meeting
In 2023, ISDA's 37th AGM is taking place on May 9 - 11 at the Swissotel Chicago. The event will be in-person, providing an ideal opportunity for all industry participants to connect and interact in a real and meaningful way. This 3 day event will showcase the high-caliber keynotes, thought-provoking panels and exhilarating evening receptions you have come to know and love about the ISDA AGM plus new and exciting ways to engage.
/jlne.ws/3LPZYYH
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| | | Jeff Bergstrom
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