 | | | | | | | | January 08, 2025 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | Editor's Note: JLN Options will not be published tomorrow, January 9, 2025, in observance of the funeral of former US President Jimmy Carter. We will be back on Friday. ~JB
| | | | | | Lead Stories | | | A 2025 Outlook, What Options Pricing May be Indicating?
Dennis Davitt, CEO of MDP - Cboe
The November Market Phenomenon: Rallying Stocks and Falling Volatility
Over the last three years, November has emerged as a statistically significant month for U.S. equity markets, particularly the S&P 500. On average, the benchmark index has rallied 6.86% during the month, while the VIX-the market's leading measure of volatility-has collapsed by 30.31%. This recurring pattern stands out not only for its consistency but also for its magnitude relative to other months of the year. While November often carries a sense of renewed optimism in markets, recent years have provided a particularly noteworthy combination of factors, including major elections, risk repricing in the options market, and a shift toward perceived "normalcy."
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Tariffied? Markets feeling the most pinch from Trump tariff risks
Reuters
From China to Europe, Canada to Mexico, world markets are already reeling from Donald Trump's promise to jack up tariffs when he becomes U.S. president in less than two weeks.
Trump has pledged tariffs of as much as 10% on global imports and 60% on Chinese goods, plus a 25% import surcharge on Canadian and Mexican products, duties that trade experts say would upend trade flows, raise costs and draw retaliation.
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Bond Market Targets 5% US 10-Year Yield as Trump Swear-In Nears
Edward Bolingbroke - Bloomberg
Bond traders who have been mired in a Treasury market slump are bracing for more of the same as Donald Trump's inauguration approaches, with options indicating the potential for a spike in US 10-year yields to 5% - a level not seen since October 2023. Speculation that Trump's policies will spur both quicker inflation and higher deficits as the US economy chugs along has sent yields on 10-year Treasury notes soaring roughly half a point over the past month to near 4.7%. A rush of corporate-bond issuance and $119 billion of US debt auctions this week - with more government borrowing expected in the weeks ahead - has added to upside pressure.
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China Boosts FX Support as Yuan Heads Toward Policy Red Line
Bloomberg
China stepped up its support for the yuan as the managed currency weakened toward a policy no-go area - the edge of its allowed trading range against the dollar. The central bank set a daily reference rate that was stronger than analyst estimates by the most since April on Wednesday, with the currency approaching a record low offshore this week. State-owned banks continued to scale back their yuan lending in Hong Kong, making it costlier for investors to build short positions, traders said.
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Is Millennium morphing into a fund of funds?
Robin Wigglesworth - Financial Times
One of the more intriguing storylines from hedge fund land last year was that BlackRock is in talks with Izzy Englander to buy a stake in his $72bn hedge fund, Millennium. On the face of it, it seemed weird. Really weird. BlackRock is all about industrial scale, and while Millennium is a giant of the hedge fund industry, it is a midget by BlackRock standards. The fee levels are obviously very different, but BlackRock has a bond ETF that is bigger than all of Millennium.
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| | | | | | Exchanges | | | CME Group to Launch Hard Red Spring Wheat Futures and Options
CME Group
CME Group, the world's leading derivatives marketplace, today announced its plans to launch physically-delivered Hard Red Spring Wheat futures and options in early Q2 2025, pending regulatory approvals.
"By adding Hard Red Spring Wheat futures and options, market participants will now be able to manage price risk across every major type of wheat on one exchange and all cleared in a single clearing house," said John Ricci, Managing Director and Global Head of Agricultural Products at CME Group.
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Aquis and Cboe step away from consolidated tape joint venture; Venture was agreed in October; "We remain committed to supporting regulators and the industry to help deliver a tape that meets users' needs," a Cboe Europe spokesperson tells The TRADE.
Claudia Preece - The Trade
UPDATED: The joint venture by pan-European equity exchanges Aquis Exchange and Cboe Global Markets has been disbanded as the pair confirm their decision to step away. Speaking in an announcement today, Aquis highlighted "economic reasons" as the motivation behind pulling out of the joint venture. Notably, the update follows news that SIX would be acquiring Aquis, as announced 11 November 2024. SIX is one of the 14 exchanges backing EuroCTPâEUR¯(first announced in the third quarter of 2023) as its shareholders.
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Miami International Holdings Reports Trading Results for December and Full-Year 2024; MIAX Exchange Group Sets Multiple Volume and Market Share Records in Options and Equities Markets
MIAX
MIAX Miami International Holdings, Inc. (MIH), a technology-driven leader in building and operating regulated financial markets across multiple asset classes, today reported December and full-year 2024 trading results for its U.S. exchange subsidiaries - MIAX, MIAX Pearl, MIAX Emerald and MIAX Sapphire (collectively, the MIAX Exchange Group), and MIAX Futures.
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EEX Press Release - EEX Group Monthly Volumes - December 2024
EEX
The EEX Group Global Power markets achieved a monthly traded volume of 994.9 TWh, marking a +28% Year-on-Year growth. This increase was largely driven by the EEX European Power Derivatives volumes, which reached a total of 725.9 TWh (+33% YoY). Record monthly volumes were achieved in Italian (+31% YoY) and Belgian Power Futures (+227% YoY), in addition to monthly records on the EEX Swiss (+72% YoY) and Slovenian (+520%) power derivatives markets.
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OCC Earns Equality 100 Award in Human Rights Campaign Foundation's 2025 Corporate Equality Index
OCC
OCC is proud to receive a score of 100 on the Human Rights Campaign (HRC) Foundation's 2025 Corporate Equality Index (CEI), the nation's foremost benchmarking survey and report measuring corporate policies and practices related to LGBTQ+ workplace equality. OCC joins more than 760 U.S. businesses honored with the HRC Foundation's Equality 100 Award as leaders in LGBTQ+ workplace inclusion.
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Farmer sentiment drifts lower while producers remain optimistic about the future
CME Group
Farmer sentiment drifted lower in December as the Purdue University/CME Group Ag Economy Barometer dropped 9 points to a reading of 136. The decline was driven by producers' weaker perspective on current conditions in U.S. agriculture and their farms, with the Index of Current Conditions falling 13 points to 100. Although the Current Conditions Index declined this month, it remains 24 points above its low in September and 5 points higher than in October. The Index of Future Expectations also fell 8 points to 153, remaining 59 points above its September low and 29 points higher than the October reading. This month's survey was conducted from Dec. 2-6, 2024.
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| | | | | | Regulation & Enforcement | | | CFTC Chairman to Step Down When Trump Takes Office; Rostin Behnam has sought a leading role for the CFTC in regulating the cryptocurrency market
Mengqi Sun - The Wall Street Journal
Commodity Futures Trading Commission Chairman Rostin Behnam said he would step down from his position on Jan. 20, as the country's top derivatives markets regulator prepares for a second Trump term. Behnam, a Democrat, has served as the CFTC's chairman since 2022. He previously served as a commissioner between 2017 and 2021 and was named acting chairman in 2021 after his predecessor, Heath Tarbert, resigned when President Biden took office.
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***** You knew Chairman Behnam will step down on January 20 already as he told you in the video interview he did with JLN at FIA EXPO in November.~JJL
SEC Obtains Final Judgment Against Former Austin, Texas Resident Who Defrauded Investors With Two Websites
SEC
On December 12, 2024, the U.S. District Court for the Western District of Texas entered a final judgment against Leena Jaitley, formerly of Austin, Texas. The SEC's complaint, filed on September 20, 2021, charged Jaitley with operating two fraudulent websites, Managed Options Trading and Options by Pros, and offering to trade options on behalf of investors. To recruit clients, Jaitley falsely claimed that the websites employed experienced traders in New York who used a proprietary trading methodology with a history of success. In reality, Jaitley acted alone from Austin, Texas or with the assistance of her father. The SEC's complaint alleged that Jaitley's misrepresentations led to at least fifteen individuals losing more than $800,000 in principal. On January 3, 2024, the court granted the SEC's motion for summary judgment against Jaitley finding that she violated multiple antifraud provisions of the securities laws.
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| | | | | | Strategy | | | The Easy Money Has Been Made in Options. What to Do Now.; Heading into fourth-quarter earnings season, investors will need to balance their enthusiasm for President-elect Donald Trump's policies against company earnings and outlooks.
Steven M. Sears - Barron's
He who changes his volatility first wins.
This options-market trading proverb is a pithy reminder of the importance of having a view on implied volatility, arguably the key determinant of put and call values.
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The market's wobbling. Here are BlackRock's shields for the biggest risks.; Gold, bitcoin and buffer ETFs could be safety nets for a volatile stock market, investment giant says
Steve Goldstein - MarketWatch
The stock market is starting to wobble. After Tuesday's 1.1% decline, the post-election gains in the S&P 500 are down to just 2%, according to Dow Jones Market Data.
The latest economic data show falling hiring and quitting rates and a surge in perceived price rises from service-sector purchasing managers. President-elect Donald Trump's news conference, in turn, did nothing to change the perception that his leadership will be at the very least unpredictable for the next four years.
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| | | | | | Miscellaneous | | | It's Wall Street bonus season: Here's when the biggest banks are expected to tell employees how much they made
Emmalyse Brownstein and Alex Morrell - Business Insider
Wall Street bonus season is kicking into high gear this week as the biggest banks get ready to tell employees how much they earned in discretionary income.
Morgan Stanley, known for leading the social-media company Reddit's initial public offering in March, is expected to start telling employees how much they earned in 2024 bonuses as soon as this week, according to three people with knowledge of the bank's plans. A spokeswoman for Morgan Stanley declined to comment.
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Editor
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