| October 13, 2022 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | 
Options Discovery Episode 9: Protective Put Basics; Michael J. Oyster Breaks Down How to Use Options to Manage Risk With JLN's Alex Teng
JohnLothianNews.com
In this episode of Options Discovery, JLN's Alex Teng breaks down the basics of a protective put strategy where an investor is long a put option while owning the underlying asset. Alex also gets a chance to sit down with the chief investment officer of Options Solutions, Michael Oyster. In this Options Discovery interview, Oyster discusses how options can be used for risk management and navigating a declining stock market.
Watch the video »
| | | | | | Lead Stories | | | An Options Trader Is Betting the Stock Market Will Collapse
Steven M. Sears - Barron's
The mood on Wall Street is so dour that it's hard to find anyone who feels good about owning stocks, much less buying them.
Sentiment is so sharply negative that even contrariansâinvestors who try to make money by doing the opposite of the market mobâare nowhere to be seen. Instead, many investors are selling stocksâor hedging in the options market in anticipation of even lower prices.
/jlne.ws/3eA8hLj
Fear Goes Missing as VIX Falls After the Latest US Inflation Shock
Elaine Chen and Sam Potter - Bloomberg
Another ugly inflation report rattled global markets Thursday, yet a glance at Wall Street's famous fear gauge suggests a lack of outright panic.
While the S&P 500 Index fell as much as 2.4% following the hotter-than-expected data release, the Cboe Volatility Index declined and was down 0.8 points to 32.8 points as of 11 a.m. in New York. The equity gauge had pared its tumble to 0.9%.
/jlne.ws/3T6y792
VIXâWall Street's Fear GaugeâFalls Amid Stock Selloff
Hannah Miao - WSJ
U.S. stocks are selling off sharply Thursday morning, but Wall Street's fear gauge is signaling traders aren't spooked.
The CBOE Volatility Indexâthe VIXâ pulled back 2.2% to 32.82 on Thursday after the release of the hot CPI report.
/jlne.ws/3CTYwAV
Volatility Is Only Certainty for Stocks With Inflation Data Due
Jess Menton and Matt Turner - Bloomberg
Stocks have been rocked by inflation data lately as markets try to gauge where the Federal Reserve stands on rate hikes. With a key consumer price index reading on tap Thursday morning, investors are bracing for one thing -- more volatility.
The S&P 500 Index has seen an average move of about 2% in either direction over the past six months following release of the consumer price index, according to data compiled by Bloomberg. That's the highest in at least five years.
/jlne.ws/3exd68o
G7 reaffirms warning against excess FX volatility
Leika Kihara - Reuters
Finance leaders of the Group of Seven (G7) advanced economies said on Wednesday they will closely monitor "recent volatility" in markets, and reaffirmed their commitment that excessive exchange-rate moves were undesirable.
"Recognizing that many currencies have moved significantly this year with increased volatility, we reaffirm our exchange rate commitments as elaborated in May 2017," the G7 finance ministers and central bank governors said in a statement released by the U.S. Treasury Department.
/jlne.ws/3rQjbQn
| | | | | | Exchanges | | | CME Group confirms Eurodollar fallbacks conversion; The derivatives exchange will convert all eligible Eurodollar futures and options to SOFR by April 2023.
Laurie McAughtry - The Trade
CME Group has confirmed plans to convert its giant Eurodollar pool to SOFR equivalents by 14 April, 2023 - a good two months ahead of the 30 June deadline for the final death of Libor, reflecting industry preference for an early (and orderly) exit. The 14 April deadline was not unexpected, but has now been confirmed by client validation, with all eligible Eurodollar futures and options to be converted to SOFR equivalent contracts.
/jlne.ws/3VpR3kE
CME Group volumes jump as derivatives maintain momentum; The group has seen ADV rise by 21% year on year as investors pile into derivatives in an attempt to navigate the current climate of volatility.
Laurie McAughtry - The Trade
CME Group has seen its quarterly international average daily volume (ADV) jump to 6.1 million contracts in Q3 2022, up 21% year on year. "Market conditions in the third quarter of the year continued to create a heightened need for risk management globally as clients worked to navigate volatility caused by ongoing geopolitical tensions and economic uncertainty," said Derek Sammann, senior managing director and global head of commodities, options and international markets at CME Group.
/jlne.ws/3Vlr4ux
Eurex FX update
Eurex
FX Futures at Eurex hit another record quarter with more than 410,000 contracts traded in Q3. This follows up on previous record quarters established in Q2 (392k contracts) and Q1 (374k contracts) this year. The open interest remains stable at ca. 77k contracts being held predominantly in EUR/USD and related Euro-pairs.
/jlne.ws/3Cph3no
Distributed ledger technology may mean 'elimination of clearing is clearly possible'
Jeremy Chan - Financial News
Jos Dijsselhof, chief executive of SIX Group, said exchanges could potentially ditch existing infrastructure and rely solely on distributed ledger technology.
"I'm a believer of the many advantages of DLT," he told Financial News at this year's Sibos. DLT is a technology infrastructure that allows record updating across a network that is able to spread across multiple locations. Markets are currently fragmented across many platforms, and some asset classes are more electronically traded than others.
/jlne.ws/3g4JFLf
Cboe Focuses on Execution
Traders Magazine
After making nine acquisitions in the past two years, Cboe Global Markets may be a bit less aggressive on the M&A trail, CEO Ed Tilly indicated.
"Rest isn't the right word, but we're focused on executing" on promises made to clients, investors and employees, Tilly said Thursday morning at the Security Traders Association Market Structure Conference in Washington, D.C.
"Our eyes are always open" for acquisition opportunities, Tilly said.
/jlne.ws/3S0cd5U
| | | | | | Technology | | | Crypto Data Science Shop Gauntlet Launches Treasury Management System for DAOs
Ian Allison - CoinDesk
Aera, a rewards-based treasury management system for leaderless decentralized autonomous organizations (DAO) has been launched by the team behind cryptocurrency data science shop Gauntlet. The Aera protocol aims to make DAOs play a more agile and risk-aware role when it comes to investing in the fast-moving world of decentralized finance (DeFi). The hope is to create organic demand for the sort of structured products or derivatives used for hedging risk and improving capital efficiency in traditional finance.
/jlne.ws/3RVoo3F
| | | | | | Strategy | | | The stock market is 'oversold,' but it pays to stay bearish
Lawrence G. McMillan - MarketWatch
The stock market has returned to an extremely bearish phase, as it has been making new yearly lows. This pattern of lower highs and lower lows, in stock prices, defines a bear market. Because of that, one should maintain a "core" bearish position.
Recent activity at the beginning of October had offered some potential hope for the bulls, as oversold conditions in the S&P 500 became buy signals in a few cases. Those were quashed by this latest return to new lows, though, and so it's back to the drawing board in terms of setting up new buy signals from lower levels.
/jlne.ws/3SXQX1H
| | | | | | Miscellaneous | | | Bitcoin Becoming Less Volatile Than Stocks Raises Warning Flag
Vildana Hajric - Bloomberg
At first blush, Bitcoin becoming less volatile than stocks might appear like a positive development. But crypto traders are warning that in a low-volume environment, that might not be a great thing.
The coin's 30-day realized volatility has "dropped sharply" in recent days, according to Noelle Acheson, author of the "Crypto is Macro Now" newsletter. It's currently at around 52% after spending the past month above 64% on an annualized basis, according to Coin Metrics data compiled by Acheson. Meanwhile, Jake Gordon at Bespoke Investment Group points to a volatility gauge called BitVol, which has "begun to break down," falling to near its lowest levels since the spring. The index currently clocks in at a little above 69, down from more than 111 in May.
/jlne.ws/3rR1SOT
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