| July 02, 2021 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | Editor's Note:
JLN Options will not be published on Monday, July 5, in observance of the Independence Day holiday. We'll be back on July 6. For those in the U.S., have a great holiday weekend!
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OCC June 2021 Options Contract Volume:
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Today's OptionsBrewTV episode from Tradier is titled "Option Gamma Exposure and its Effects on SPX Returns" in which Jason and Lex discuss how understanding the dealers' positions can shed light on option gamma exposure and its relationship to SPX returns. -- YouTube
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Here are the highlights from the CME Group's second-quarter volumes compared to Q2 of 2020: Average daily volume, or ADV, increased 5%. Interest rate futures and options volume rose by 25%, including record SOFR futures ADV of 118K, an increase of more than 200%, and interest rate options volume grew by 19%. CME had record bitcoin volume for futures and options ADV of 26,575 contracts as well as record Ether futures ADV of 3,740 contracts.
On the ag side, futures and options volume increased 24%, including record volume from outside the United States. Agricultural ADV from EMEA was up 35% while ADV from Asia rose by 67%. And agricultural options ADV jumped by 76%, while corn options ADV increased 116% and soybean oil options grew by 174%. Overall options ADV grew 13% to 3.1M. On the metals side, volume rose by 9%, including a record 4.3K ADV in copper options. And lastly, foreign exchange volumes grew by 6%. -- CME Group
| | | | | | Lead Stories | | | Days after Charlie Munger called Robinhood 'a gambling parlor,' the free-trading app revealed options trading as its largest source of revenue
Matthew Fox - Markets Insider
Just two days after Charlie Munger of Berkshire Hathaway called Robinhood "a gambling parlor," the free-trading app said it derives a majority of its revenue from options trading.
The comments from Warren Buffett's right-hand man came in an interview with CNBC on Tuesday night, in which the billionaire investor said, "it's telling people they aren't paying commissions when the commissions are simply disguised in the trading."
/jlne.ws/3662XHZ
Options traders are fired up about fintech as big banks splash cash
Tyler Bailey - CNBC
JPMorgan's acquisition of OpenInvest, a San Francisco-based ESG start-up, marks its third fintech deal in the past year. The recent uptick in buying has options traders speculating about who could be the next takeout target in the fintech space.
One name seeing a major increase in activity is SoFi Technologies, another San Francisco-based company specializing in mobile-first loan refinancing, mortgages and other financial products.
/jlne.ws/3hwMOAi
OCC June 2021 Total Volume Up 25.6 Percent from a Year Ago
OCC
OCC, the world's largest equity derivatives clearing organization, announced today that June 2021 total cleared contract volume was 870,149,871 contracts, the second highest month in OCC's history and up 32.7 percent compared to June 2020. Year-to-date average daily cleared contract volume through June was 39,400,310 contracts, up 25.6 percent compared to June 2020.Options: Total exchange-listed options cleared contract volume was 866,099,522, up 25.8 percent compared to June 2020. Equity options cleared contract volume was 826,487,445 contracts, up 26.9 percent compared to June 2020.
/bit.ly/2UlcN5Q
Wall Street Rebels Warn of 'Disastrous' $11 Trillion Index Boom
Justina Lee and Yakob Peterseil - Bloomberg
To critics of the $11 trillion passive boom, active management is the original form of ethical investing -- and time is running out to save it from the indexing onslaught.
"On a societal basis, it's potentially disastrous," says Michael Green, chief strategist at Simplify Asset Management, referring to the passive frenzy. "There's an impending crisis that requires people to make changes."
/jlne.ws/3Ag1yw6
Robinhood Warns of Meme-Stock Risk as Users Participate in IPO
Crystal Tse - Bloomberg
Robinhood Markets Inc. basically created meme stocks. Now the popular trading app is warning investors that it could become one.
The reason -- outlined in its initial public offering prospectus Thursday -- comes down to the novice investors that love its easy-to-use platform and have driven frenzied trading in names like GameStop Corp. and AMC Entertainment Holdings Inc.
/jlne.ws/2TmwbzB
Bitcoin's sliding put-call ratio points to weakening bearish sentiment
FX Street
The last time the put-call ratio dropped to six-month lows was during the December-January bull run.
Bitcoin's put-call open interest ratio has slipped to six-month lows, indicating an ebbing of bearish sentiment.
According to data tracked by options analytics platform Skew, the ratio measuring the number of open positions, or open interest in put options relative to open interest in call options, fell to 0.60 on Wednesday, a level last seen in early January.
/bit.ly/2TmBS0r
Robinhood Is Going Public. Is This the End of the Meme Trade?
BARRON'S
Meme traders will soon be able to trade stock of the company that made it all possible: Robinhood.
The app-based, commission-free stockbroker filed paperwork with the Securities and Exchange Commission Thursday, a key step in preparing to raise money in an initial public offering.
Robinhood sees its mission as democratizing finance, a noble goal, worthy of its namesake. But in the public's eye, it's the narrative is all about meme-stock madness. Robinhood is inextricably linked to companies such as GameStop and AMC Entertainment thanks to the wild trading in those names and its participation in Congressional hearings designed to help lawmakers figure out what's going on.
/bit.ly/3dD54H4
AMC shares fall after Iceberg Research discloses short position
Akanksha RanaSinéad Carew - Reuters
AMC Entertainment (AMC.N) shares fell as much as 12% on Friday after short-seller IcebergResearch tweeted that it had made a bearish bet against the theater chain operator's stock.
The so-called meme stock was last down 8.9% at $49.40 after falling as low as $47.77 following Iceberg's disclosure on Twitter that it had sold the shares short, which involves borrowing shares with a view to buying them back at a lower price to cover the bet.
/reut.rs/2TyDVOK
| | | | | | Exchanges | | | London Edges Back Ahead of Amsterdam as Europe's Trading Hub
Ksenia Galouchko and Tom Metcalf - Bloomberg
U.K. capital regains crown for first time this year, Cboe says; Share trading in London still far below pre-Brexit levels
London moved back ahead of Amsterdam as Europe's largest share trading center in June, reclaiming the top spot for the first time this year after Brexit pushed much of the city's volumes to the continent. An average 8.92 billion euros ($10.6 billion) of shares a day were traded on various London venues in June, compared with 8.8 billion euros for various Dutch venues, according to data from Cboe Europe.
/jlne.ws/2UZOjzE
Cboe Announces Launch of New Cboe 3-Month Implied Correlation Index
Cboe
- New volatility-related benchmark index provides three-month, constant maturity representation of implied correlation for the S&P 500 Index
- Aims to help market participants better understand factors driving volatility and implement dispersion trading strategies
- Index values are disseminated four times per minute during the trading day
Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, today announced it is publishing intraday values for the Cboe 3-Month Implied Correlation Index (ticker symbol: COR3M), a new benchmark index that is designed to provide market participants with further granularity into some of the factors driving volatility in the equity markets.
/bit.ly/3wfxWvw
CME Group Reports Q2 and June 2021 Monthly Market Statistics
CME Group
CME Group, the world's leading and most diverse derivatives marketplace, today reported its Q2 and June 2021 market statistics, showing it reached average daily volume (ADV) of 18.4 million contracts for both the second quarter and the month of June. Market statistics are available in greater detail at https://cmegroupinc.gcs-web.com/monthly-volume.
/jlne.ws/3AjxxeV
MGEX Reports June as the Second-Best Month in History
MGEX
MINNEAPOLIS, MN - MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), reports that this past month was the 2nd best month in the history of the Exchange with a grand total of 412,672 contracts traded. This is the first time MGEX has reached over 400,000 contracts since June 2017. Compared to May, June saw a 58% increase in total volume.
/jlne.ws/3jAxXI2
Miami International Holdings Reports May 2021 Trading
Results, MIAX Exchange Group Sets New Market Share
MIAX
Miami International Holdings, Inc. today reported May 2021 trading results for its U.S. exchange subsidiaries - MIAX , MIAX Pearl and MIAX Emerald (together, the MIAX Exchange
Groupâ¢) and the Minneapolis Grain Exchange (MGEX).
/bit.ly/368YMeh
| | | | | | Regulation & Enforcement | | | ECB to crack down on dangerous risks in banks' leveraged lending
Martin Arnold - Financial Times
Banks are too complacent about the excessive risks building up in leveraged loan and equity derivative markets and can expect higher capital requirements as a result, the European Central Bank's head of supervision has warned.
Andrea Enria said on Friday that he was worried about "market complacency and excessive risk-taking" by banks, adding that there were "warning signs of increasing leverage, financial complexity and opacity creating the potential for a dangerous combination of risk factors".
/jlne.ws/3whkiYW
Jefferson County man charged with operating binary options fraud scheme
U.S. Department of Justice
COLUMBUS, Ohio - A federal grand jury here has indicted William T. Caniff, Jr., 52, of Toronto, Ohio alleging multiple wire fraud and money laundering charges related to a binary options fraud scheme.
Binary options are a type of options contract in which the payout depended on the outcome of a yes/no proposition, typically related to whether the price of a particular asset would rise above or fall below a certain amount. A binary option did not give the holder the right to buy or sell the underlying asset. Instead, the holder received a pre-determined amount of money or nothing at all.
/bit.ly/3ylcXsD
| | | | | | Strategy | | | You Have a Theory, Which Options Should You Choose?
David Borun - Nasdaq
Options contracts have been around for hundreds or possibly even thousands of years, but the modern exchange-traded, standardized options have only been in existence since 1973.
Starting with calls - puts were added in 1977 - the Chicago Board Options Exchange (CBOE) introduced options contracts on stocks with uniform terms that simplified transactions.
Instead of negotiating the size and time frame of every contract, buyers and sellers could now make transactions in options contracts that all had the same size and expired on the third Saturday of each calendar month. The establishment of the Options Clearing Corporation also gave traders the confidence that the terms of the contracts would be honored and that there was no counter-party risk.
/bit.ly/3hboQf2
| | | | | | Education | | | 2021 Educational Series: Collars, Covered Combinations and Cash-Secured Puts
OIC
In the upcoming third quarter, The Options Industry Council (OIC) will provide investors with another new series of educational webinars, all for free and all geared towards enhancing the knowledge of anyone interested in the financial markets.
During the upcoming quarter, OIC will provide detailed overviews of three option-based strategies: collars, cash-secured puts, and covered combinations. As with all option strategies, the investor needs to understand the benefits and risks, and OIC will cover each of these aspects.
/bit.ly/3hwb05Y
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| | | Jeff Bergstrom
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