| February 16, 2023 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | JPMorgan Strategist Kolanovic Warns of 'Volmageddon 2.0' Risk in Options Market
Lu Wang - Bloomberg
The explosive rise of short-dated options is creating event risk on the scale of the stock market's early-2018 volatility implosion, according to JPMorgan Chase & Co.'s Marko Kolanovic.
That episode, known as Volmageddon, sparked market chaos exactly five years ago and forced the shuttering of one major volatility-focused exchanged-traded product. The latest proliferation of options with zero days to expiry has similar potential to create market turmoil, the top-ranked strategist says.
/jlne.ws/410kfBr
****JB: Also see the MarketWatch story, Another 'Volmageddon'? JPMorgan becomes the latest to warn about an increasingly popular short-term options strategy and/or The Wall Street Journal story, Are 0DTE Options Creating the Next 'Volmageddon?' and/or the Bloomberg story, Peter Tchir Likens Zero-Day Options Trading to Betting on 'Horse Race' and/or the MarketWatch story, A potential stock-market catastrophe in the making: Risky option bets put Wall Street on edge.
'50 Cent' VIX Trader Returns as Volatility Hedging Back in Vogue
Lu Wang - Bloomberg
The "50 Cent" trader, who made a splash in the options market years ago, is likely back with another big bet on stock volatility.
In a transaction late Tuesday, someone paid 50 cents each for 100,000 call contracts, worth $5 million, betting that the Cboe Volatility Index will surge to 50 in May. Another purchase at the same strike price and expiry was fired out Wednesday, with 50,000 contracts snapped up at 51 cents apiece for $2.6 million in total.
/jlne.ws/3EATV7x
****JB: Also see the Markets Insider story, '50 Cent' Trader May Be Betting Big on Surge in Market Volatility.
How Options Could Help Solve the Retirement Crisis
Steven M. Sears - Barron's
The U.S. options industry is approaching a milestone. On April 26, the industry will celebrate its 50th anniversary.
During the past five decades, options have evolved from a curiosityâtraded by a few pioneering souls with great math skills in the old smoking lounge at the Chicago Board of Tradeâinto one of the world's most important markets. At last count, 16 U.S. options exchanges belonged to the Options Clearing Corp., which issues and settles all options contracts.
/jlne.ws/3EgjhHA
Options liquidation can be costly. How costly?
Ravi K Jain - Risk.net (SUBSCRIPTION)
The options trading boom shows little sign of fizzling out. Average daily volumes of cleared options are more than double pre-pandemic levels, and continue to rise, according to data from the Options Clearing Corp.
/jlne.ws/3k8JKjd
George Soros' fund reveals it's betting against Silvergate as the crypto-friendly bank is probed over its ties to FTX
Zahra Tayeb - Business Insider
Soros Fund Management bought put options on 100,000 shares of Silvergate, worth $1.74 million as of December 31, according to a 13F filing.
Those who purchase put options are essentially betting that the stock's price will fall. The contracts become more valuable when the underlying stock's price falls and turn cheaper when the share's price rises.
/jlne.ws/3S2OuUj
Private markets don't 'launder volatility', honest; Private market fund valuations could be better though
Cyril Demaria - Financial Times
Last October, Narv Narvekar of Harvard's $51bn endowment said private market funds did not reflect "general market conditions" and warned of "substantial markdowns" to come. AQR's Cliff Asness has gone even further, and argued that private market funds are "volatility laundering" their valuations.
/jlne.ws/3lEMuW2
Why 'Bad' News in the Economy Hasn't Rattled Stocks: DataTrek
Phil Rosen - Markets Insider
Markets have remained stable despite recent economic data that suggests the Federal Reserve will have to maintain restrictive monetary policy for longer.
Specifically, monthly reports on payrolls, consumer prices, and retail sales came in higher than expected, indicating that the Fed's efforts to cool the economy are insufficient.
/jlne.ws/3Kcfj6m
Investors should 'judiciously' embrace risk and split between growth and value, says a BlackRock fund manager
Filip De Mott - Business Insider
Just a few months ago, the consensus on Wall Street was for a recession this year or next year. But recent economic data have started to shift sentiment toward a soft landing.
And Koesterich is in that camp, predicting decelerating growth but no downturn.
/jlne.ws/3KamMCX
'It depends on how close to the brink we go': Stock market turmoil likely if U.S. teeters toward a default, analysts say
Joy Wiltermuth - MarketWatch
Congress might only have until this summer to strike a deal to lift or suspend the U.S. government debt ceiling, prompting analysts to warn of growing risks to global financial markets as America moves closer to a potential default.
"It would cause immeasurable harm to financial markets," Amar Reganti, a fixed-income strategist at Hartford Funds, told MarketWatch. If a debt-ceiling crisis isn't averted and the government no longer can borrow to cover expenses, he said, "there is no part of modern capital markets that offer shelter" to investors if a substantial U.S. credit rating downgrade occurs.
/jlne.ws/3k3VZO9
The S&P 500 Is The Most Popular And Overpriced Benchmark In The World
Michael Cannivet - Forbes
Almost everyone is invested in the S&P 500 index, which may present a problem.
According to ETF.com, there are 2,205 exchange traded funds (ETFs) currently trading in the US market. The largest is the SPDR S&P 500 ETF SPY -1% with approximately $359 billion in assets. Among the top ten equity ETFs, the top three are all S&P 500 index passive funds.
/jlne.ws/3EfCQ2x
| | | | | | Exchanges | | | ICE Announces Record Trading and Participation Across North American Environmental Markets With Strong Growth in Renewable Energy Markets
ICE
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, today announced record volume and participation in its North American environmental markets, with a record 270 companies trading last year. ICE offers customers the most liquid markets to trade futures and options on California Carbon Allowances, California Carbon credits, RGGI Allowances (RGA), California Low Carbon Fuel Standard (LCFS) Credits, and Renewable Energy Certificates (RECs). Across the portfolio, a record 3.64 million contracts traded last year, a 5% increase over 2021, with average daily volume increasing 5.5% to 14,500 contracts.
/jlne.ws/3KcH5Q7
| | | | | | Regulation & Enforcement | | | The SEC Comes for Crypto Custody
Matt Levine - Bloomberg
Roughly speaking the way the US stock market works is that all of the stocks are in one place. The place is called DTC, the Depository Trust Company, which in some sense owns almost all of the stocks. If you own a stock, what you own is an entry on a list at your brokerage, saying that you are entitled to some of the stocks that it is holding onto for clients, and what your brokerage has is an entry on a list at DTC, saying that it is entitled to some of the stocks that DTC is holding onto. (And what DTC mostly owns is entries on lists at all the companies, or their transfer agents, saying that it owns the stocks that those companies issue.)
/jlne.ws/3Ir1FLr
| | | | | | Strategy | | | Opinion: The U.S. stock market is trying to find direction, but the trend is still bullish
Lawrence G. McMillan - MarketWatch
The U.S. stock market, as measured by the S&P 500 Index, SPX, -1.20% is having trouble finding direction.
The supposedly bullish breakout over triple resistance at 4100 was only a modest upside catalyst, as SPX stalled out at 4200. Later, the index fell back below 4100, raising the possibility of a false breakout â an event that usually has swift downside ramifications. But again, nothing â no follow-through.
/jlne.ws/3k0ZLYH
VIX Futures React to PPI Data
Cboe (Video)
In today's #Vol411, Scott Bauer @cboesib covers #PPI, $VIX action, active single name #options and the announced launch of the Cboe One Options Feed, a real-time U.S. options market data solution.
/jlne.ws/40YRXHw
| | | | | | Events | | | Tradier Announces Most Diverse, Actionable Options Summit Yet!
Tradier
Join us Feb 22, 2023 for the Fourth Tradier Options Summit in partnership with Cboe Global Markets!
You know your hosts for the event, Tradier, a leading Fintech solutions provider, and Cboe, a leading provider of market infrastructure and tradable products.
Tradier and Cboe have joined forces not once or twice but four times to bring a wealth of knowledge, an expert set of speakers, and some of the top industry professionals from their respective communities together for this event.
This time around, you can expect more diversityâincluding international and female speakersâalong with actionable tips for your 2023 trading strategy.
The event will be held virtually on February 22, 2023, 11:00 a.m. - 4:30 p.m. (EST), delivering an exclusive opportunity for both new and experienced online traders to connect, learn, and network together.
/jlne.ws/3YAhEN2
| | | | | | Miscellaneous | | | Why Not Just Print More Money and Not Tell Anyone? TikTok and Reddit Are Obsessed.
Beth Pinsker - Barron's
As inflation stubbornly clings to the U.S. economy, people are increasingly looking for solutions, and at the top of the list is this one: Why not just print more money? And why not do it without telling people, so that it doesn't backfire with even more inflation?
The idea pops up all over, and the approaches to explaining it range from Jack Corbett on NPR's popular Planet Money TikTok channel to a discussion on the "ask science" subReddit to various YouTube contributors like Money & Macro.
/jlne.ws/3ScRJZh
WallStreetBets Founder Sues Reddit
Akane Otani - WSJ
WallStreetBets' founder is suing the site where it all began.
Jaime Rogozinski, creator of the community that sent untold numbers of individual investors piling into meme stocks two years ago, filed a lawsuit against Reddit. Mr. Rogozinski is accusing the social-media platform of breaching contract by ousting him from his role as a WallStreetBets moderator in 2020 and infringing on his right to trademark the WallStreetBets brand, among other complaints.
/jlne.ws/3S2mH6l
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| | | Jeff Bergstrom
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