| October 23, 2019 | | | | | Matt Raebel
Editor
John Lothian News | |
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| | | | Observations & Insight | | |
The Spread: Negative interest rates, VIX for bonds and an options bet that netted a 14,000% return
JohnLothianNews.com
Will the fed cut rates? Are we headed for negative rates? Fun with acronyms (ICE buys MOVE) and a guy who lucked into a 14,000% return on an options trade making Wall Street Bets on Reddit proud. That and more in this week's edition of "The Spread."
Watch the video »
| | | | | | Lead Stories | | | A $50 Billion Bond Trade Embraced by Goldman Hinges on ETF Gains
Bloomberg
Bond traders at some of the world's largest banks have more than $50 billion riding on the success of the exchange-traded fund market, according to a new report from BlackRock Inc.
So-called portfolio trades, in which multiple bonds from different borrowers change hands during one transaction, are "a direct result of the growth of fixed income ETFs and their associated ecosystem," BlackRock executives led by Dan Veiner, the firm's global head of fixed income trading, wrote in the report. More than $1 trillion is invested in bond ETFs, with trading leaping 41% in 2018 from a year earlier, according to this research.
/bloom.bg/33Qbsn8
****JB: Among other things the article notes, "The options markets on certain fixed income ETFs have been growing even more rapidly than the ETFs themselves."
Volatility Heats Up But Volume Doesn't
Larry Tabb - TABB Forum
Volatility and volume dislocated over the past few months. While the average closing VIX increased by 50% from April through July, volume only increased 10%. TABB Group founder and research chairman Larry Tabb looks at the key equities market activity in the second quarter.
bit.ly/2BEDLJ6
With commission-free trading nearly everywhere, here's what investors should demand now
James Royal - Bankrate
In a matter of a few days, the brokerage industry went from charging customers for making trades to handing them out like candy at Halloween. Virtually every major online broker is now letting you trade stocks and ETFs without a fee. Many are also offering options trades without a base commission, though they do still require a per-contract fee, often around $0.65 a pop.
bit.ly/32GPjaH
| | | | | | Exchanges and Clearing | | | Performance Bond Requirements
CME Clearing
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed below.
bit.ly/2JfunA0
| | | | | | Regulation & Enforcement | | | U.S. Companies Advised to Prepare for Multiple Benchmark Rates in Transition from Libor
Mark Maurer - WSJ
Advisers to globally expanding U.S. companies are recommending that they prepare to use several short-term lending benchmarks when the London interbank offered rate falls out of use.
Libor is a scandal-plagued benchmark that is used to set the price of trillions of dollars of loans and derivatives globally. A group of banks and regulators in 2017 settled on a replacement created by the Federal Reserve known as the secured overnight financing rate, or SOFR. Companies must move away from Libor by the end of 2021, when banks will no longer be required to publish rates used to calculate it.
/on.wsj.com/2N4nvql
CFTC Commissioners, Staff Win Reprieve From Contempt Hearing
Dylan Tokar - WSJ
The U.S. Commodity Futures Trading Commission's top brass can't be blocked from airing their views on the agency's enforcement efforts, an appeals court has ruled.
The ruling by the U.S. Court of Appeals for the Seventh Circuit is a victory for the CFTC, which has been locked in a legal battle with Kraft Foods Group Inc. and Mondelez Global LLC over statements the agency released following a settlement with the two food companies.
/on.wsj.com/2PjGGyS
| | | | | | Technology | | | Data, Data Everywhere: Takeaways from International Trader Forum
Brian Schaeffer - TABB Forum
The massive amount of market data available today can lead to making smarter decisions, but it also can lead to paralysis by analysis. But the democratization of technology means that simple and cost-effective analytics solutions are available to firms of all sizes, and you need to be doing something in this area. Focus on what you can do right now rather than what you can't, advises Clearpool.
bit.ly/32SLmQc
| | | | | | Strategy | | | Missed the Brexit Rally? A Racy Bet Backs Both Stocks and Pound
Justina Lee - Bloomberg
For traders who missed sterling's biggest rally in a decade, there may still be a few clever ways to claim a share of the Brexit spoils. Especially if you're willing to double-down.
Money managers can position for a rise in U.K. equities and the pound through the end of the month -- when Britain is scheduled to leave the European Union -- by buying call options on a $2.3 billion BlackRock Inc. ETF tracking the country's stocks, according to Macro Risk Advisors and Cowen & Co.
/bloom.bg/35XE281
VXX: Shorting Volatility is Bigger, and Riskier, Than Ever
Steve Smith - Stock News
Selling option premium or shorting volatility has often been compared to picking up dimes in front of a steamroller. Despite the risks and the not-too-distant blow-up of VIX- related products earlier this year, more money than ever is piling into these strategies.
And recent reports and data suggest that returns are shrinking, meaning people are now picking up pennies at the risk of being flattened by an adverse event.
bit.ly/2MJlp0d
****JB: In my day the saying was "picking up nickels in front of a steamroller." Inflation I guess.
| | | | | | Education | | | What Do You Provide?
OIC
At The Options Industry Council (OIC), we provide education to investors of all levels, from those who are new to options to those who are experienced market professionals. We want every investor to be comfortable with the products cleared by our sponsor, The Options Clearing Corporation (OCC). Whether there's a question about equity options, index options or any other OCC cleared products, we're here to help. OIC also supports advisors and trading firm members who may have questions about strategies or market data. We believe that anyone with an interest in the financial markets can understand options, and we encourage learning on our site through our videos, podcasts and popular online webinars, as well as in-person at our live events.
bit.ly/35URPMx
| | | | | | Miscellaneous | | | The Case for Payment for Order Flow
Larry Tabb - TABB Forum
While the world of payment for order flow sounds murky, it really is not once you understand the challenges of being a market maker and how equity orders are carried out, says TABB Group founder and research chairman Larry Tabb.
bit.ly/2ByHXu9
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| | | Matt Raebel
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