| May 18, 2023 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | |
Options Discovery Episode 17: Intro to Different Asset Classes for Options; the Chief Commercial Officer of Deribit, Luuk Strijers, Discusses Options for Digital Assets and More With JLN's Alex Teng
JohnLothianNews.com
In this episode of Options Discovery, Alex Teng introduces the different asset classes that options can be derived from. This includes assets such as fixed income, commodities, equities, indices, and currency. Alex then sits down with Luuk Strijers, chief commercial officer of Deribit, to discuss the emerging market of digital currency options and the Deribit exchange. Alex and Luuk discuss a variety of topics from growing options volume to regulatory concerns. Feel free to learn more about Deribit here: https://www.deribit.com/
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| | | | | | Lead Stories | | | Zero-Day Options Are Reordering the Way the Stock Market Behaves; Evidence grows that 0DTE boom is messing with equity patterns; Intraday volatility and muted daily moves both linked to 0DTE
Lu Wang and Carly Wanna - Bloomberg
Wall Street has accepted that derivatives trading will never be the same after the frenzy for fast-twitch stock options took hold. What it next has to absorb: The equity market itself is threatening to go the same way. Evidence is starting to stack up that the craze for so-called zero-day contracts, known as 0DTE, is altering how underlying assets behave. The idea is that the surge in trading of these tools - essentially side bets - has become so big that it's affecting the broader market.
/jlne.ws/45dp7oP
Alibaba Options Show Stock May See Record Swings After Earnings
Jeanny Yu - Bloomberg
Alibaba Group Holding Ltd. is poised to see the most dramatic post-earnings market reaction ever Friday, as investors load up on stock options to bet on the Chinese e-commerce giant's financial health and restructuring progress.
The options now imply that Alibaba's Hong Kong-listed shares could move 6.9% in either direction, marking the biggest daily price swing on record following its earnings release, Bloomberg data show. The stock jumped as much as 4.4% to HK$89.20 Thursday, while the most-traded option Thursday is a bullish contract that would benefit if the shares rise above HK$90 by the end of this month.
/jlne.ws/3IqiJ3L
Wild Currency Swings Shaved $29 Billion Off of Corporate Profits
Anya Andrianova - Bloomberg
Volatile currencies once again wreaked havoc on North American corporate profits in the fourth quarter, underscoring the importance of hedging and risk management for firms that do business overseas.
Swings in global foreign-exchange markets cost the companies about $28.9 billion in the last three months of 2022, according to Kyriba Corp., a treasury-management software company. That puts the total amount of North American corporate profits lost due to currency moves last year at $121 billion, data show.
/jlne.ws/3pZ77yc
El-Erian: Markets Vs. Fed Discord Is Unsettling, May Spark Turbulence
Zinya Salfiti - Markets Insider
The ongoing discord between the Federal Reserve's policy signals and financial-market expectations is unusual, and could end up sparking a bout of market volatility or eroding the central bank's credibility, according to top economist Mohamed El-Erian.
The Fed has been persistent in its war against inflation, and raised interest rates for the 10th time in a row this month. While officials have signaled a possible pause in rate hikes, they haven't suggested that outright cuts are on the way.
/jlne.ws/439Abl3
'Doomsday machine': Here's what could happen if the debt ceiling is breached
Christine Idzelis - MarketWatch
Congress is taking debt-ceiling negotiations uncomfortably near a vague but fast-approaching deadline that is closely monitored by markets. It's not clear exactly when that deadline will arrive or exactly what will happen if it does. But from Wall Street to Washington there is fear that the fallout could be very bad.
The debt ceiling is "a doomsday machine and ought to be dismantled," said David Kelly, chief global strategist for the asset-management business of the nation's biggest bank, JPMorgan Chase & Co., in a phone interview.
/jlne.ws/42MY2HC
| | | | | | Exchanges | | | Off-Exchange Trends: Beyond Sub-dollar Trading
Cboe
Off-exchange U.S. equity volumes have increased significantly in recent years, trading over 4.6 billion shares in April 2023. In a previous analysis, Cboe's North American Equities Execution Consulting team explored the relationship between high volatility and the increase in trading reported to the Trade Reporting Facilities (TRF). Since then, we have also seen that sub-dollar trading increased as a result of increased retail participation during periods of high volatility, such as through the meme stock phenomenon. The increase in sub-dollar trading has created a misconception that off-exchange volumes are also primarily sub-dollar trades. To further understand the increase in off-exchange volumes, we analyzed how market share trends of U.S. equity off-exchange trading are impacted at different symbol price points.
/jlne.ws/437QA9B
MIAX Options Exchange - Trading Of Stock-Option Orders With Non-conforming Ratios
Press Release
The MIAX Options Exchange will begin accepting non-conforming ratio stock-option complex orders beginning Monday, May 22, 2023.
/jlne.ws/3Ohm3Ca
Nodal Exchange and IncubEx Collaborate to Expand the Largest Suite of Environmental Futures and Options with New REC and California Compliance Offset Contracts
Nodal Exchange - Business Wire
Nodal Exchange and IncubEx announced today the pending launch of two new renewable energy certificates (REC) futures related to the PJM REC markets and a new California Compliance Offset futures contract. These first-of-their-kind contracts further expand the world's largest exchange-listed suite of environmental products on Nodal Exchange, which tops more than 100 environmental futures and options contracts
/jlne.ws/3o6CyWW
******* And the winner for the highest number of environmental futures and options contracts is? Nodal Exchange!~JJL
FEX Global Suspension of ESPO Asian Crude (Argus) Futures and Options Contracts
FEX
The Board of Directors of FEX Global have determined to indefinitely suspend for trading all futures and options products referencing the ESPO Asian Crude (Argus) Benchmark. This suspension will come into effect after the close of today's trading session. A market notice has been published at 9.30am today AEST. FEX Global is deeply concerned about the invasion of Ukraine and believe that this action is in line with both the legal and other sanctions that have been imposed on Russia and Belarus as well as the intent of those sanctions.
/jlne.ws/3okYde1
| | | | | | Regulation & Enforcement | | | A ban on short selling is a bad idea; Studies show that a similar move in 2008 was counter-productive and stoked market volatility
Jim Overdahl - Financial Times
Following weeks of declining prices for US regional bank stocks, short selling of equity shares is once again coming under scrutiny with calls for more regulatory oversight of the practice. In a letter to clients this past week, a major Wall Street law firm argued that the Securities and Exchange Commission should impose a 15-trading day prohibition on short sales of the stock of financial institutions.
/jlne.ws/3IbCpIy
CFTC Staff Issues an Advisory Related to Prime Brokerage Arrangements and Derivatives Clearing Organization Registration Requirements
CFTC
The Commodity Futures Trading Commission's Division of Clearing and Risk (DCR) today issued a staff advisory that encourages entities using prime brokerage arrangements that provide credit substitution on a centralized basis to examine the specific nature of their activities for the potential need to register as a DCO.
/jlne.ws/3MAXX42
SEC Proposes Rule Amendments and New Rule to Improve Risk Management and Resilience of Covered Clearing Agencies
SEC
The Securities and Exchange Commission today proposed rule changes that would improve the resilience and recovery and wind-down planning of covered clearing agencies. The proposal would amend the existing rules regarding intraday margin and the use of substantive inputs to a covered clearing agency's risk-based margin system and add a new rule to establish requirements for the contents of a covered clearing agency's recovery and wind-down plan.
/jlne.ws/3OEeF47
| | | | | | Technology | | | Options tests OpenAI for real-time market data analysis in Microsoft Azure
Rick Steves - Finance Feeds
Options Technology is actively testing OpenAI for real-time market data analysis in Microsoft Azure in a move that is expected to offer clients unparalleled market insight and analysis.
The testing and integration of OpenAI's technology into Options Technology's extensive global market data platform and backbone will continue throughout the coming months.
/jlne.ws/3MBVlD1
BGC adds 37 new HKEX derivatives products to electronic trading platform; The addition follows the launch of Fenics GO by the interdealer broker in 2019.
Claudia Preece - The Trade
BGC Partners' electronic trading services and software provider, Fenics GO, has added 37 HKEX MSCI derivatives products to its platform. Fenics GO is integrated with Eurex workflow and allows traders to anonymously access and interact with block liquidity in futures and options for processing of cleared derivatives trades.
/jlne.ws/3pU8ize
HKEX Suite of MSCI Products Launched with Fenics GO
BGC Partners
Fenics GO, an innovative global platform and service for accessing and transmitting financial information and trading financial instruments, including, exchange listed options and delta 1 products, operated by the Fenics division of BGC Partners, Inc. (Nasdaq: BGCP) ("BGC Partners," "BGC" or the "Company"), today announced that it has introduced 37 HKEX MSCI derivatives products on to its multi award winning platform. Working together with HKEX is an important step in expanding the range of products that Fenics GO can offer as well as acknowledging our goal of a more efficient, compliant, and cheaper method for arranging block trades for the wider market.
/jlne.ws/3og4qIj
| | | | | | Strategy | | | Using Options to Bet on a Bullish or Bearish Breakout for Stocks
Steven M. Sears - Barron's
Volatility might be the most attractively priced asset in the global markets.
The Cboe Volatility Index, or VIX, is around 18, which broadly suggests that options prices lack significant fear or greed premiumsâeven though global and domestic affairs are unusually chaotic and hard to forecast.
/jlne.ws/45cAkG6
Debt ceiling is a buy-the-rumor-but-sell-the-news event, cautions this strategist
Barbara Kollmeyer - MarketWatch
Stock markets may have woken from a slumber thanks to debt-ceiling hopes, which sparked a Wednesday rally for Wall Street, nudging the S&P 500 SPX, 0.52% out of a grinding trading range.
While investors wait for more DC developments, big retailer Walmart reported on Thursday, while an appearance by Fed Chairman Jerome Powell looms for Friday.
/jlne.ws/45gScjs
Options Traders Bet on Small-Cap Rebound
Eric Wallerstein - WSJ
Small-cap stocks have lagged this year. Options traders are betting on a resurgence.
/jlne.ws/41QaiFK
Jobless Claims On The Rise
Cboe (Video)
In #Vol411, @JoeTigay talks about how the debt ceiling negotiations, jobless claims and the Fed are impacting #volatility.
/jlne.ws/3MhbCvQ
| | | | | | Miscellaneous | | | The CME's Terry Duffy on the Big Risks He's Seeing Now
Odd Lots - Bloomberg Podcasts
Terry Duffy is the chairman and CEO of CME Group, the world's biggest derivatives exchange and a trading behemoth whose name is synonymous with Chicago's financial industry. In this wide-ranging interview, Duffy talks about the big risks in the market he's seeing right now and how the CME is preparing for them.
/jlne.ws/41I3kCW
****** If you are not subscribed to the Odd Lots podcast, you should be.~JJL
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