 | | | | | | | | December 18, 2024 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | I have been asked recently why the CME Group is going into the single stock futures business. Risk.net reported six days ago that the CME was planning on launching SSFs on the Magnificent 7 stocks, including names such as Amazon, Nvidia and Tesla. I have made the argument that zero-day-to-expiration options are a form of SSF with embedded options.
Given the tremendous success of the 0DTE options, the CME adding SSFs in the Magnificent 7 stocks makes perfect sense on two fronts. On the one hand, it is another variation of the 0DTE/SSF to trade, one without the embedded option. On the other hand, it is a product that can be traded against the 0DTE options, though in a futures account. If one was long a 0DTE call, it might be a better deal to just sell a SSF rather than buy a 0DTE put. I used to love to play ping pong trading futures against my option positions when they were close to the money or in the money near expiration.
What do you think? Why is the CME launching single stock futures on the Mag 7 stocks? Let me know. ~JJL
| | | | | | Lead Stories | | | Bitcoin Sets Another All-Time High in Climb Toward $110,000; Original cryptocurrency has surged more than 150% this year; US 'election dividend' is driving demand, Butterfill says
Monique Mulima and Muyao Shen - Bloomberg
Bitcoin reached an all-time high for a second consecutive day, with traders eyeing the $110,000 price level. The original cryptocurrency rose as much as 2.1% to $108,315 on Tuesday, before retreating back to its price at the start of the day around $106,000. It has surged more than 150% this year, and traders are increasing bets for further gains in the options market.
/jlne.ws/41E6pau
Bitcoin Rally Leaves the World's Original Crypto ETFs Behind; Canadian Bitcoin ETFs have seen net outflows so far this year
Monique Mulima - Bloomberg
In what's been a record-breaking year for Bitcoin, the originators of the world's first exchange-traded funds to hold the cryptocurrency appear to be at risk of being left behind. Bitcoin ETFs were launched in Canada in February 2021, making them the first in the world. This led to billions of dollars of inflows from Canadian and foreign investors who wanted exposure to the original digital currency. But when US Bitcoin ETFs were approved earlier this year, some investors began to reconsider their Canadian crypto investments.
/jlne.ws/4gxcWrU
GameStop Far-Off Bullish Options Bets Snapped Up for Second Day
David Marino - Bloomberg
Traders bought a slew of bullish contracts on video-game retailer GameStop Corp. over the past two days, less than a month after an X post from Keith Gill, the online persona known as Roaring Kitty, sent meme stocks flying.
From late Monday through Tuesday, more than 100,000 $125 calls expiring Jan. 17 changed hands. Shares have risen almost 12% this week, closing at $31.26 on Tuesday. But they would have to roughly quadruple over the next month for the options to be in the money. Of course, a steep rally would also be enough to boost the value of the options, bought at an average of about $0.795 each.
/jlne.ws/49R79LK
Brazil Traders 'Sell First, Ask Later' as Panic Hits Markets; Currency selloff spreads to stocks, bonds and default swaps; Sentiment sours as deficit concerns outweighs economic growth
Giovanna Bellotti Azevedo, Vinicius Andrade, and Ezra Fieser - Bloomberg
First it was a collapse in the currency. Now the rest of Brazil's financial markets are in the cross-hairs as investors lose faith in the government's ability to contain a deepening fiscal crisis.
The selloff that sent the real plunging to a record low is engulfing everything from stocks to local-currency debt to dollar bonds, with traders even piling into hedges against a sovereign default. Market watchers say extraordinary measures on Tuesday by the central bank to stem the currency's slide are little more than a temporary fix, and warn that lawmakers' moves to water down a high-profile austerity package are likely to only add to the turmoil.
/jlne.ws/4iAmHr0
MicroStrategy's Nasdaq Entry Kicks Off New Era of Momentum Risk; Much-coveted inclusion adds new fuel to the crypto mania; Price-agnostic index flows can be damaging when momentum turns
Lu Wang and Isabelle Lee - Bloomberg
MicroStrategy Inc.'s entry into the Nasdaq 100 opens up the largest corporate holder of Bitcoin to a new - and untapped - investor: the index-tracking juggernauts. Yet Wall Street pros warn the oncoming march of these price-insensitive investors threatens a new source of vulnerability in a stock that has soared more than 500% this year on booming demand from retail investors, as well as hedge funds capitalizing on its volatility.
/jlne.ws/49KgFAb
Oil Traders Toasting Trump Are Split on What He Means for the Market; The US president-elect's support for tariffs raises concerns about a trade war eroding demand, while others welcome an injection of volatility.
Mia Gindis and Christopher Charleston - Bloomberg
The oil traders swarming Miami's South Beach for three days of holiday drinking, dining and schmoozing were mostly male, mostly White and mostly united in the belief that Donald Trump will champion the industry when he returns to the White House.
/jlne.ws/3BpAnVf
Investors brace for hawkish Fed rate cut - and more volatile markets in 2025; 'We're going to study the dot plot, like everybody, and then I'm going to put it in a drawer,' says BlackRock's Rick Rieder
Christine Idzelis - MarketWatch
The spotlight Wednesday will be on the Federal Reserve's decision on monetary policy and its plotting out of interest-rate projections, but Wall Street is bracing for disruption in early 2025 that could change how the Fed moves next year.
"We're going to study the dot plot, like everybody, and then I'm going to put it in a drawer," said Rick Rieder, BlackRock's chief investment officer of global fixed income and head of the BlackRock global allocation investment team, by phone. That's because the range of possible outcomes from potential policies of the incoming White House administration is "very wide," he said. "The unpredictability is too high."
/jlne.ws/41HPJz0
| | | | | | Exchanges | | | The S&P-500 Index Skew Steepens on Defensive Year-End Flows
Ed Tom - Cboe
Interest rate volatility led the across-the-board advance in cross-asset volatilities last week driven by the increase in the PPI for the 2nd consecutive month (PPI=0.4% vs 0.2% consensus). Despite indications of lingering inflation, Fed Fund futures are pricing in a steadily higher chance of a rate cut (93% now vs 87% last week and 62% 2 weeks ago). Crypto demand continues unabated with the 10 largest Bitcoin ETF holdings within the Cboe CBTX recording its 12th consecutive inflow totaling $18B. As the alt-asset forges ahead into uncharted territory, options sentiment remains bullish with CBTX call open interest outpacing puts by 2:1.
/jlne.ws/49KYKcD
The Lion Electric Company (LEV)
TMX
Bourse de Montreal (the ''Bourse'') and CDCC wish to inform you that the Toronto Stock Exchange announced on December 17, 2024, that the common shares of The Lion Electric Company ("Lion Electric") are suspended. The trading of Lion Electric options at the Bourse is suspended at the present time. The Auto-Exercise function will not be available for Lion Electric. Manual exercises only are permitted and must be processed manually by the member firm. If a decision to exercise is taken, holders of the Put options will need to make provisions to be able to deliver the stock.
/jlne.ws/4gDARpA
HKEX Offers Enhanced Data Products Experience With Launch of HKEX Data Marketplace
HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce today (Wednesday) the launch of the HKEX Data Marketplace, a web-based platform that offers data users a more intuitive experience in accessing HKEX's historical and reference data. The new platform will feature a modern user interface with multiple data delivery channels including cloud transfer, providing data directly from HKEX to offer optimal user experience and convenience. In its initial stage, the HKEX Data Marketplace will offer shareholding data from the Central Clearing and Settlement System (CCASS) for commercial use, as well as historical full book data from HKEX's securities and derivatives markets, and securities market daily non-trading reference data.
/jlne.ws/3VN8iOn
LSEG announces the launch of Historical Analytics available through Snowflake
LSEG
LSEG customers will have additional flexibility in generating analytics for over 2.9 million fixed income securities with over 20 years lookback. London Stock Exchange Group (LSEG) announces the launch of Historical Analytics available through Snowflake. The Historical Analytics offering combines LSEG's Pricing Services with Yield Book Analytics to provide pricing information for over 2.9 million bonds with over 20 years lookback. LSEG customers will be able to access the Historical Analytics offering via Snowflake which as a delivery channel offers LSEG customers flexibility in accessing the solution. This allows customers to move away from multiple services to one fully integrated powerful analytics service. By enabling our customers to access this via the Snowflake cloud infrastructure we are ensuring customers can access the analytics they need, in a way that suits them best.
/jlne.ws/4iISKFh
OCC Stories: Rita Varghese on the Anatomy of a High-Performing Team
OCC
Rita Varghese is part of the Market Operations team supporting OCC's participant exchanges. In her OCC story, she describes how our transparent and collaborative culture enables her high-performing team to deliver world-class customer service. Read it below!
/jlne.ws/3DnPnn9
| | | | | | Regulation & Enforcement | | | Korea Fines Barclays, Citi for Naked Short Selling: Chosun
John Cheng and Youkyung Lee - Bloomberg
South Korea has fined Barclays Plc and Citigroup Inc. for naked short selling, Chosun Ilbo newspaper reported, as the nation ramps up its fight against such illegal trading practices. Barclays and Citi were fined 13.7 billion won ($9.5 million) and 4.7 billion won, respectively, by the Securities and Futures Commission, according to the report which didn't say where it obtained the information.
/jlne.ws/4gFdv2V
ASIC sues crypto company Binance Australia Derivatives for consumer protection failures
ASIC
More than 500 retail clients of Oztures Trading Pty Ltd, trading as Binance Australia Derivatives (Binance), were denied important consumer protections after being misclassified as wholesale clients, ASIC alleges in documents filed in the Federal Court. ASIC alleges from 7 July 2022 to 21 April 2023, Binance offered crypto derivative products to 505 Australian retail investors who were misclassified as wholesale clients, representing 83% of its Australian client base.
/jlne.ws/3P0hwmz
| | | | | | Strategy | | | 2 Trades to Consider Before Trump Takes Office
Steven M. Sears - Barron's
Two thoughts are paramount as investors await Donald Trump's return to the White House. One is tantamount to exercising more and eating better. The other is to embrace gluttony and get an Ozempic prescription.
/jlne.ws/3P3Mw5u
Volatility Sweet Spots
Michael "Dr. Data" Rechenthin - tastylive
Options volatility patterns for major ETFs and tech stocks show which IV ranges tend to create the best trading opportunities.
Last week, we showed how volatility tends to overstate actual movements. Today, we are taking that Research farther.
We looked at the SPY, QQQ, IWM and DIA to find volatility trading "sweet spots"-areas where implied volatility (IV) tends to be overstated relative to the realized volatility (actual price move) 30 days later. We used six years of price action for each exchange-traded fund (ETF).
That "sweet spot" for the indices is areas where IV is between 0.20 and 0.40 - mid to mid-high volatility regimes.
/jlne.ws/4ghT6B6
| | | | | | Miscellaneous | | | Thought ESG was hard to define? Try its antithesis; Investors who want to bet against progressive values have a few options, none straightforward
Lex - Financial Times
The ESG movement has always faced a definition problem. Investors, providers and regulators differ widely on what makes the "environmental, social and governance" grade. But if that debate seemed complex, the anti-ESG movement gives it a run for its money. Stock-pickers eager to bet against liberal or left-wing values have a few options. Exchange traded funds such as the God Bless America ETF and the America First ETF have sprung up to provide a counterweight to what their sponsors see as a blurring of the line between progressive politics and finance.
/jlne.ws/3DvUJwp
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| | | | John Lothian News (JLN) is the news division of John J. Lothian & Company, Inc. (JJLCO). The online media and financial services firm is staffed by derivatives industry, journalism and technology professionals. | | | | | | | John Lothian News Editorial Staff: | | | John Lothian
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