| January 29, 2024 | | | | | Jeff Bergstrom
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John Lothian News | |
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Long Put, Buying Put Options - Term of the Week
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This video explores the basics of a long put option contract.
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| | | | | | Lead Stories | | | US Traders Snap Up China Options as Cheap Way to Catch Rebound
Yiqin Shen - Bloomberg
Traders who fear missing out if there is a recovery in China stocks after a tumultuous stretch are dipping a toe in the options market as a cheaper way in. This week, the $4.2 billion iShares China Large-Cap ETF (ticker FXI) - one of largest US-traded funds tracking China equities - saw the most call options trade in more than a year, while the volume of bullish contracts in technology-focused KraneShares CSI China Internet ETF (ticker KWEB) surged to the second highest level ever.
/jlne.ws/497lDVX
Chinese regulators curb short selling as market downturn deepens; Measures come into effect from Monday and are designed to 'create a fairer market order'
Chan Ho-him - Financial Times
China has moved to officially limit short selling after informal efforts failed to stop a worsening stock market sell-off. Investors who buy shares will not be allowed to lend them out for short selling within an agreed lock-up period, the Shenzhen and Shanghai bourses said on Sunday. The measures, which will come into effect from Monday, are designed to "create a fairer market order", the China Securities Regulatory Commission said. Further limitations on securities lending will be introduced from March 18, the regulator added.
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Hedge funds lap up China stocks at fastest pace in 5 years - Goldman
Nell Mackenzie - Reuters
Hedge funds snapped up battered Chinese stocks over three days last week at the fastest pace in more than five years, Goldman Sachs (GS.N), opens new tab wrote in a note to clients.
The cumulative net buying of Chinese equities for Jan. 23-25 marked the biggest three-day shopping spree in more than five years, Goldman wrote in the note published on Friday and seen by Reuters on Monday.
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Why the Short Volatility Trade Is Back and Bigger Than Ever
Tracy Alloway and Joe Weisenthal - Bloomberg (Audio)
There are plenty of one-off risks at the moment, but it seems like betting on pretty much nothing happening is more popular than ever. Investors are increasingly reaching for a wide variety of derivatives to bet against volatility. Those derivatives include one- and zero-day options which expire in 24 hours or less, and have become a hot button topic on Wall Street. So what's the impact of this explosion in options trading? Why is it happening at a time when the possibility of major disruptions seems more likely than ever (even if realized volatility remains low)? And what impact could it have on the wider market? In this episode, we speak with Kris Sidial, Co-CIO of Ambrus Group, about the return of the short vol trade.
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Macro volatility will force market operators to reform; A range of macroeconomic, regulatory and market structure changes occurring across the world will drive the need for transformation for market operators across the globe, writes, Magnus Haglind, head of marketplace technology, Nasdaq, who points out that change doesn't always come with a heavy price tag and substantial execution risk.
The Trade
This year will drive profound change for mission-critical service providers across global capital markets. Extreme spikes in volume and volatility - triggered by election cycles and other global events - will strain markets around the world. The introduction of T+1 in the US, alongside swathes of regulatory reforms, will mandate structural change across the global financial system. And emerging technologies will expose organisations that don't have the in-built flexibility to embrace it.
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UK looks increasingly isolated in its anti-crypto ETF stance
Steve Johnson - Financial Times
The UK is becoming increasingly isolated as one of the few major global markets to continue to hold back from approving retail access to cryptocurrency exchange traded products.
Continental Europe has them, as do Australia, Brazil and Canada. The US has followed suit most recently with spot bitcoin ETFs, prompting Hong Kong to say it will also jump on board.
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Jim Cramer ETFs Are History With Closure of Struggling Short Fund; SJIM to close after attracting $2.4 million in assets; 2023 was the second-highest year for ETF closures on record
Emily Graffeo and Isabelle Lee - Bloomberg
Jim Cramer has spent about four decades on Wall Street in a career that has taken him from hedge-fund manager to host of CNBC's Mad Money show. The ETFs he inspired have proved a lot less durable. The Inverse Cramer Tracker ETF (ticker SJIM), a fund that aimed to short stocks recommended by the bombastic TV personality, is poised to join its bullish sibling on the ETF scrapheap, it was announced Thursday. SJIM will stop trading Feb. 13, according to a press release. The product has managed to attract just $2.4 million in assets since its launch in March 2023.
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Grifols Sues Gotham City Over 'False' Short-Seller Report; Spanish company blasts Gotham City, principals as 'predatory'
Chris Dolmetsch - Bloomberg
Grifols SA sued Gotham City Research over a report alleging the company has overstated profit and misstated its accounting. Gotham City Research, run by Daniel Yu and Cyrus de Weck, is the publishing arm of General Industrial Partners, a hedge fund that launched when Gotham City and short-selling fund Portsea Asset Management combined.
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| | | | | | Exchanges | | | ICE Reports Record Total Futures and Options Open Interest with Record Trading Activity in Global Commodities Markets
Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of technology and data, today announced that its global futures and options markets reached record open interest of 87.2 million contracts on January 25, 2024, with ICE's commodities futures and options markets hitting record open interest of 61.5 million contracts. ICE's energy futures and options portfolio recorded record open interest of 56 million contracts on January 24, 2024, as ICE's energy futures hit record open interest of 33 million contracts, the highest since June 2021. ICE TTF natural gas futures and options hit record open interest of 3.6 million contracts, up 93% year-over-year (y/y).
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CME Stock Beat the S&P 500. One Director Bought Up Stock.
Ed Lin - Barron's
CME Group stock rose in 2023, edging out the broader market last year, One longtime director continues to buy shares of the operator of financial-derivatives exchanges. CME stock logged a 25% gain last year, ahead of the 24% rise in the S&P 500 index. The company is the parent of the Chicago Mercantile Exchange and Chicago Board of Trade. Longtime CME director William R. Shepard paid $281,000 on Jan. 18 for a total of 1,390 shares, an average price of $202.44 each. According to a form he filed with the Securities and Exchange Commission, Shepard bought 59 shares through a personal account that now owns 2,322 CME shares. A trust that Shepard controls purchased the other 1,331 shares, and now owns 253,060 shares.
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CME Group Latin American FX Futures Hit All-Time Volume and Open Interest Records in 2023
CME Group
Increased client participation deepens liquidity and further strengthens price discovery function. CME Group, the world's leading derivatives marketplace, today announced its Mexican peso and Brazilian real FX futures contracts reached all-time average daily volume (ADV) and open interest (OI) records in 2023. The increased trading is resulting in deeper liquidity and broader client participation, which in turn, strengthens reliance on these markets as the premier source of price discovery for the broader FX marketplace.
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Adapting to climate change in central clearing: risks, environmental footprint and enabling transition
Eurex
Central clearing houses (CCPs) are a key part of the Financial Market Infrastructure (FMI) landscape that can be impacted by climate change in multiple ways. Eurex spoke with Fiona van Echelpoel, a Deputy Director General in the Directorate General Market Infrastructure and Payments (DG-MIP) of the ECB, about how the ECB is approaching the role and responsibilities of FMIs in tackling climate risks.
/jlne.ws/4b9jg77
| | | | | | Regulation & Enforcement | | | Keynote of Chairman Rostin Behnam at the ABA Business Law Section Derivatives & Futures Law Committee Winter Meeting
"CFTC GT"
CFTC
Good afternoon. I am delighted to join you today back in Naples for the first time since 2020. The last several years tested resilience across the derivatives markets, which required working together to meet the most extreme, but plausible issues, events, inquiries, and environmental, geopolitical, and fiscal conditions. The urgent need for action could not be met with hyperbolic responses. Creating ad hoc boundaries and structures to earn an immediate victory lap rarely instills or supports market integrity. Of course, neither does abdicating action until optimal conditions prevail. As I think about my tenure and the direction of the agency, I have tried to follow the racing line: the most optimal path, making use of the entire breadth of our track.
/jlne.ws/3Hzaq4S
| | | | | | Strategy | | | Big firms on Wall Street are piling into a bitcoin trade that goes beyond hoping for a price spike
Filip De Mott - Markets Insider
Futures traders are piling into bitcoin contracts.
An average 66,000 futures contracts have been exchanged daily this month at the CME Group, marking a new high and an almost 50% rise month-to-month, according to The Financial Times.
/jlne.ws/494kpuY
A Popular Option Trade Returns in 2024 as Hedge Funds Short Volatility
Tim Fries - The Tokenist
The "short volatility trade" is making a comeback in 2024. The move involves wagering on reduced volatility, typically via VIX futures. In 2018, this same trade significantly backfired on investors causing a "Volmageddon," inflicting severe losses as market volatility surged unexpectedly.
/jlne.ws/3OhMXZW
Tech Titans' Earnings Take Center Stage as the Fed ponders rates and China Grapples with Housing Woes
JJ Kinahan - tastylive
Markets are expected to remain subdued today ahead of a busy week with earnings reports, the FOMC announcement and an employment report
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If You Want to Hedge the SPX, Now Is the Time
Todd Salamone - Schaeffer's Investment Research
Last week, I mentioned the S&P 500 Index (SPXâ4,890.97) had finally broken out above all-time highs, with the added bonus of strong short covering potential to help support a sustained breakout.
I did not address the historical implications of the SPX breakout but, we covered this in the February 2024 issue of our monthly newsletter, The Option Advisor, published on Friday.
Tesla Options
Cboe (Video)
With earnings season underway, there's definitely no shortage of reports coming out this week. In today's #Vol411, Joel Hawthorne @louiswinthrop tells us which ones to expect -- including $AAPL, $AMZN, $GOOG and more.
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| | | | | | Education | | | A veteran trader breaks down the technical-analysis tool he uses to singlehandedly determine when to enter and exit a trade
Laila Maidan - Business Insider
Shain Vernier's uncle introduced him to trading in 2010. Since then, it has become his full-time profession. Today, he mainly trades crude oil, gold, and currencies using a technical-analysis tool called Fibonacci retracement. He's also a teacher and coach helping others learn how to chart at HowToTrade.com.
While many trading tools and indicators can be used to chart price action, Vernier says every market participant needs to find the most sensible combination for their own purposes.
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| | | | | | Events | | | The Asset Management Derivatives Forum 2024 anticipates drawing 350 members from the Futures Industry Association (FIA) and the Securities Industry and Financial Markets Association (SIFMA) from February 7 to 9, 2024, to the Ritz-Carlton, Laguna Niguel??, in Dana Point, CA. Sessions will center on emerging products and strategies in today's business and macroeconomic landscape, offer insights into the regulatory pipeline, and examine trends in technology, including AI and blockchain. The opening day will include a luncheon featuring a Washington update, sponsored by Women in Financial Markets (WIFM). Learn more and register HERE. ~SAED
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