| April 14, 2022 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | As Fed tightens up, U.S. stock investors play defense on options market
Saqib Iqbal Ahmed - Reuters
U.S. stock investors are increasingly turning to the options market for protection against more downside on Wall Street as they worry the Federal Reserve will be less sensitive to equity market volatility as it hikes interest rates to fight inflation.
Demand for puts, typically bought for downside protection, is in line with a trend that has seen investors ramp up hedging in recent months, as the Fed's hawkish tilt roils markets after years of double digit gains.
/jlne.ws/3rqK8KG
Skittish Stock Traders Are Bracing for $2 Trillion Option Expiration
Vildana Hajric - Bloomberg
Inflation is surging, central banks are on the move and now it's earnings season. To top it all off, stock traders face the market-roiling potential of a monthly options expiration estimated at more than $2 trillion. Roughly $495 billion in single-stock derivatives are set to expire Thursday, with another $980 billion of S&P 500-linked contracts and $170 billion in options tied to the State Street fund tracking the S&P 500 all running out as the holiday-shortened week ends, according to estimates from Goldman Sachs Group Inc.'s Rocky Fishman. Such volumes have been a source of volatility in the past year.
/jlne.ws/37cvsb7
Oil Traders Turn Toward to Obscure Options Market for Extra Finance
Alex Longley, Devika Krishna Kumar and Michael Roschnotti - Bloomberg
Some oil traders are tapping the options market to ease the financial pressure caused by soaring margins and volatile crude prices.
Since war broke out in Ukraine in February there has been a surge in trading of so-called euro-box spreads on West Texas Intermediate. The strategy is similar to a zero coupon bond -- a way for sellers to raise cash in the face of limited sources of capital.
/jlne.ws/3EiKqbt
Wall Street Traders at Goldman, Citi Reap Gains on Turmoil as Growth Fears Mount
Jennifer Surane and Hannah Levitt - Bloomberg
Traders at Wall Street's biggest investment banks had a better-than-expected quarter as the war in Ukraine compounded volatility already simmering on inflation concerns and a lingering pandemic. But as fears of recession creep in, questions are emerging about future earnings growth.
/jlne.ws/3ObOcrP
Podcast: Jeff Currie on the 'Volatility Trap' Keeping Commodity Prices So High
Joe Weisenthal and Tracy Alloway - Bloomberg (Podcast)
Goldman's top commodity strategist Jeff Currie was one of the earliest to call that we're in a new commodities supercycle, starting early last year. Well, it's not even close to over. Currie estimates that we're just in the second inning of it. The issue is what Currie characterizes as a "volatility trap" that's keeping investment on the sidelines, despite surging prices of spot commodity prices. In this episode, he explains how far commodity prices can go, what the challenges are to inducing further investment, and what policies could help bring things into balance.
/jlne.ws/3LWumim
| | | | | | Exchanges | | | Enable All-or-None for all Options on SOFR Futures and to Weekly Eurodollar Mid Curve Options
CME Group
Effective Sunday, May 1, 2022 for trade date Monday, May 2, 2022, and pending all relevant CFTC regulatory review periods, please be advised that the Chicago Mercantile Exchange, Inc. (CME or EXCHANGE) will enable All-or-None trading for the products listed below on Open Outcry
/bit.ly/3KHTHMT
| | | | | | Strategy | | | Embrace Inflation --- and Play It Using Stock Options
Steven M. Sears - Barron's
Embrace inflation. Try not to overthink the market's confusing cross currents. Learn to be comfortable being uncomfortable.
It's perhaps the only reasonable response to recent U.S. government data that indicated inflation was at the highest level since 1981.
After all, few people likely expected that the stock market would initially rally off a hot consumer price index. Yet the stock market did just that off March CPI data, even though the news was another sign that the state of the world remains a raging hot mess.
/jlne.ws/36hnrBc
Opinion: This stock market is showing a frustrating lack of follow-through
Lawrence G. McMillan - MarketWatch
The S&P 500 index has pulled back from its late-March rally, and in doing so raised the possibility that the bear market is still in force. But the jury is still out on that.
The intermediate trend still appears to be down (blue lines on the accompanying chart). Shorter-term activity, however, shows a more positive bias in that the "modified Bollinger Bands" (mBB) are now moving higher. Realized volatility has begun to shrink modestly, and the Bands are pulling closer together.
/jlne.ws/3vmRmjE
| | | | | | Miscellaneous | | | Tesla Stock Drops After Elon Musk Offers to Buy Twitter. This Is Why.
Al Root - Barron's
Tesla CEO Elon Musk offered to buy the social-media platform Twitter on Thursday, sending shares of the car maker lower.
Investors might be worried about distraction for Musk as Tesla (ticker: TSLA) ramps up production at new plants, but there are other potential concerns as well.
/jlne.ws/3Ef5Lmc
Your Office Is Open and the Liquor Is Flowing
Callum Borchers - WSJ
Almost anytime is a good time for alcohol in Jude Maboné's office these days.
The 26-year-old marketing professional in Washington, D.C., says her workday usually ends at 6 p.m., but on a recent Tuesday most of the staff called it quits and broke out the drinks at 4:30 p.m. Then there was a Thursday when her bossesâsome two or three times her ageâstarted scooping liquor-infused ice cream with the same alcohol content as a Budweiser at 2:30 p.m.
Ms. Maboné and her 20 or so colleagues have been back at their desks for about a month, and she has noticed alcohol is "always in the center of social things here."
/jlne.ws/3M4tbxs
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