| May 03, 2022 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | 
John Davidson on OCC's technology changes, options education, and the challenges of continuing options growth
JohnLothianNews.com
John Davidson is CEO of the OCC, a position he has held since December of 2018. He spoke with John Lothian at the FIA Boca 2022 conference about how the OCC has handled the "remarkable" growth in options trading volume and the recent increase in retail options participation, and how it continues to educate potential options traders.
Watch the video »
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Tesla Stock Plummets after Musk Twitter Takeover; CME Group to Launch Aluminum Options Contract; IDX held in London
JohnLothianNews.com
"Alex Perry's Optionstopia" takes a look at this week's options news highlights: Tesla Stock Plummets after Musk Twitter Takeover; CME Group to Launch Aluminum Options Contract; IDX held in London
TERM OF THE WEEK: This week's Term of the Week presented by Euronext Knowledge Centre is Intrinsic Value of Cash Settled Options.
Watch the video »
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FIA's International Derivatives Expo is returning to The Brewery in London this coming 6-8 June. Standing still is not an option in today's evolving cleared derivatives environment. Without adapting to new products, processes, technologies and regulations, your business won't meet the needs of tomorrow's industry. We're bringing together industry leaders, vendors and policymakers to discuss what's "now" in derivatives, and what lies ahead. here
| | | | | | Lead Stories | | | Investors Are So Bearish on Stock Market That Wall Street Looks Bullish
Jan-Patrick Barnert and Justin Zacks - Bloomberg
Investors have become so negative about the stock market that Wall Street is starting think a rally may be on the way.
JPMorgan Chase & Co. strategists led by Marko Kolanovic said this week that "investor sentiment is reaching extreme weakness," meaning a rebound could be on the cards. Meanwhile, a Societe Generale SA sentiment indicator recently dropped to levels last seen during the peak of Covid-19 lockdowns in 2020.
/jlne.ws/3vXYsf3
U.S. Shale Giants Facing $42 Billion in Hedging Losses Bet on High Oil Prices
Devika Krishna Kumar and Paul Takahashi - Bloomberg
U.S. shale giants stung by billions of dollars in hedging losses are spending big bucks to ditch their positions in a risky bet that prices stay high.
Companies including Pioneer Natural Resources Co. and EOG Resources Inc. are poised to post historic profits when they report earnings this week. But those windfall earnings would be even higher if it weren't for massive accounting losses from hedges that protect against falling prices while limiting upside potential. Producers in the aggregate are looking at about $42 billion in oil and gas hedging losses through 2023, according to BloombergNEF calculations of data from last year.
/jlne.ws/3vES11q
Big Stock Market Bears Say S&P 500 (SPX) Bottom Still Another 700 Points Away
Vildana Hajric and Lu Wang - Bloomberg
It's a fact of life in struggling markets: someone is always saying things will get worse. According to a number of prominent equity strategists, they're about to get a lot worse.
After extending its 2022 decline to 13%, the S&P 500 is in danger of an even deeper dive in the months ahead, according to the technical and macro research team at Strategas Research Partners. The group led by Chris Verrone is watching out for a slide toward the 3,500-3,700 area, a range that encompasses the gauge's 200-week moving average and the midpoint of its entire rally from the 2020 pandemic bottom. A drop to 3,500 would represent a 16% loss from Monday's close.
/jlne.ws/37bCi0t
Why Oil Hasn't Spiked as EU Weighs Ban on Russian Crude
Avi Salzman - Barron's
The European Union could agree as soon as this week to ban Russian oil to further isolate the country economically after its invasion of Ukraine. While the possibility of an oil embargo doesn't seem to be moving markets today, several factors surrounding it could cause large moves in the coming weeks.
/jlne.ws/3FbzYmA
Recession fears are growing. Is this volatile stock market trying to tell us something?
Mark Hulbert - MarketWatch
Might recent stock market weakness be forecasting an economic recession? Up until last this week, few had given that possibility much credence. The market's weakness â the S&P 500 SPX, 0.54% is down about 14% from its early-January 2022 all-time high, at last check â was caused by rising interest rates, the narrative went, and those rising rates were themselves a reaction to an overheated economy â not one about to contract.
/jlne.ws/3y9unvC
Funds trim exposure in CBOT grains but remain acutely bullish
Karen Braun - Reuters
Speculators eased their record bullish bets in Chicago grains and oilseeds last week, though corn and soybean oil futures went on to new highs in the following days and other contracts maintained their sharp yearly gains.
Although net selling was the latest theme among commodity funds, it was based predominantly on the reduction of longs and not new shorts. That indicates investors remain highly uncertain about forward price trends while also acknowledging continued threats to global supplies.
/jlne.ws/3w3Eq2C
Producer sentiment improves with strengthened commodity prices; but high cost inflation worries farmers
CME Group
The Purdue University/CME Group Ag Economy Barometer improved in April up 8 points to a reading of 121; however, it remains 32% below its reading from the same time last year. Producers' perspective on current conditions and future expectations saw an uptick over the past month. The Index of Current Conditions improved 7 points to a reading of 120 and the Index of Future Expectations improved 9 points to a reading of 122. The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers' responses to a telephone survey. This month's survey was conducted between April 18-22.
/jlne.ws/3kBOnPv
| | | | | | Exchanges | | | CME Group to Launch Options on Micro WTI Crude Oil Futures as Futures Volume Nears 20 Million Contracts Traded
CME Group
CME Group, the world's leading derivatives marketplace, today announced it will expand its micro-sized energy offerings with the launch of options on Micro WTI Crude Oil futures on June 6, 2022, pending regulatory review.
/jlne.ws/3MKQjkF
Cboe Global Markets Completes Acquisition of ErisX, Entering Digital Asset Market
Cboe Global Markets
Ownership of ErisX provides Cboe with entry to digital asset spot and derivatives markets, including clearing and settlement; Opportunity to build comprehensive digital asset market data offering, create indices and explore further derivative products; Network of industry partners, intermediaries and market participants of all types expected to contribute to ongoing development of client-driven solutions to increase adoption of digital assets and further mature the market
Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, today announced it has completed the acquisition of Eris Digital Holdings, LLC (ErisX), an operator of a U.S. based digital asset spot market, a regulated futures exchange and a regulated clearinghouse. Ownership of ErisX allows Cboe to enter the digital asset spot and derivatives marketplaces through a digital-first platform developed with industry partners to focus on robust regulatory compliance, data and transparency.
/jlne.ws/3w3Yt17
***** Congratulations to Cboe on closing the deal. This is a good deal for Cboe; they get a bunch of crypto assets and one WILD asset, Jessica Darmoni. ~JJL
OCC April 2022 Total Volume Becomes Highest April on Record, Up 9.4% Year-Over-Year
OCC
OCC, the world's largest equity derivatives clearing organization, announced today that year-to-date average daily volume through April 2022 was 41.8 million contracts, up 4.2 percent compared to year-to-date average daily volume through April 2021. Total volume was 782.8 million contracts, up 9.4 percent compared to April 2021.
/jlne.ws/37a6uJp
CME Group Reports April 2022 Monthly Market Statistics
CME Group
CME Group, the world's leading derivatives marketplace, today reported its April 2022 market statistics, showing average daily volume (ADV) increased 26% to 20.8 million contracts during the month. Market statistics are available in greater detail at https://cmegroupinc.gcs-web.com/monthly-volume.
/jlne.ws/3yaRoOX
| | | | | | Technology | | | Deutsche Börse to provide global derivatives market data from CME Group on A7 Analytics platform
Deutsche Börse
Deutsche Börse is expanding the market data offering on its cloud-based online analytics platform A7 to include historical market data from global derivatives marketplace CME Group. The two firms recently reached a licensing agreement, which will enable market participants to test their trading strategies and make highly-informed trading decisions by subscribing to market data sets from either, or both, exchanges via the A7 platform. Historical data from CME Group will be available daily on a t+1 basis, and, initially, will include data from each of its four designated contract markets - the Chicago Board of Trade (CBOT), Chicago Mercantile Exchange (CME), Commodity Exchange (COMEX) and New York Mercantile Exchange (NYMEX). The new data sets from CME Group will be available from June of this year.
/jlne.ws/3LyYCjv
| | | | | | Strategy | | | Stock Splits Lead to Split Results in Trading
Cboe
Recently, Alphabet (GOOGL) and Amazon (AMZN) â two of the largest companies by market capitalization âboth announced 20:1 stock splits. More recently, GameStop Corp (GME), potentially the most famous of the 2021 retail "meme" stock phenomenon ," announced a 10:3 split. Investors responded positively, as the price of the underlying securities rallied in the trading sessions immediately following the announcement. With stock splits making headlines, Cboe's North American Execution Consulting Team analyzed potential changes to underlying securities, pre- and post-split, from a market structure perspective in both equities and options markets.
/jlne.ws/3LCrl70
US regulatory scrutiny of 'complex' ETFs prompts fears of crackdown
Steve Johnson - Financial Times
US regulators are scrutinising the sale of a range of exchange traded funds to retail investors, prompting growing concerns in the industry that they are planning a clampdown.
Finra, the Financial Industry Regulatory Authority, has asked for feedback on sales practices for "complex products" amid a surge in trading by small investors of some relatively complicated vehicles.
/jlne.ws/37ZLfdu
How to Invest When Both the Stock Market and Bonds Are Falling
Anne Tergesen and Veronica Dagher - WSJ
Chances are your portfolio is taking a beating right now as stock and bond prices fall together for the first time in decades. Yet the best strategy in moments of volatility like this one, financial advisers say, is also one of the least satisfying: Do nothing.
/jlne.ws/3833dMb
Think Vol Is Overbought? This Option Trade Could Perform
Steven Baster - Barchart
With most stocks seeing big downside moves and high volatility, we could be due for some consolidation. Iron condors are a strategy that does well when stocks stay relatively flat.
An iron condor aims to profit from a drop in implied volatility, with the stock staying within an expected range.
When implied volatility is high, the wider the expected range becomes.
/jlne.ws/3MI9iMO
VIX (VX) Near Key 30 Level In Busy News Week
Darren Chu - Barchart
The VIX (VIJ22) is consolidating after yesterday's surge to the highest level in 2022. Although odds are moderate for a deep profittaking to kick in sometime this week, the VX appears to be gearing up for a higher May low versus the April low. Nevertheless, any break below the psychologically key 30 whole figure level will dramatically increase the probability of the VX retesting sometime this week, the 50% Fib retrace of the rally that began off the 2022 low.
/jlne.ws/3w12lQr
| | | | | | Miscellaneous | | | Bored Ape's Apecoin Plunges After Otherside Metaverse Debut
Jacob Kozhipatt - Business Insider
Apecoin, the cryptocurrency launched by Yuga Labs, creators of the Bored Ape Yacht Club, surged 65% last week, only to come crashing back down to earth over the weekend.
The rally came in anticipation of Yuga's newest project, Otherside. Otherside is a Bored Ape-themed metaverse, and the virtual world opened for its first land sale on April 30 to high expectations.
/jlne.ws/3Kzs9bu
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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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