| August 13, 2024 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | MIAX Sapphire, owned by Miami International Holdings, Inc. (MIH), launched its electronic options exchange on August 12, 2024, marking MIAX's fourth U.S. listed options exchange. OCC, the world's largest equity derivatives clearing organization, announced that MIAX Sapphire, LLC has joined as an OCC participant exchange. With this addition, OCC now provides clearing and settlement services to 21 exchanges and trading platforms for options, futures, and securities lending transactions.
The World Federation of Exchanges (WFE) issued a report, "WFE data: trading value and volumes surge as investors flock to markets" that showed a rise in investor interest for listed securities in the first half of 2024, with trading values up 11.7% and volumes increasing by 9.6%, despite global economic and geopolitical uncertainties. Global equity market capitalization grew by 5%, driven primarily by the Americas, while APAC's rapid growth slowed, and EMEA remained flat. IPOs declined by 24.2%, although the Americas saw a 36.4% increase in IPO numbers, contrasting with declines in APAC and EMEA. Despite fewer IPOs, the average IPO size increased by 18.8%, bolstered by seven unicorn listings, including Puig Brands and Galderma Group. Exchange-traded derivatives continued their growth, rising 11.6%, though currency options plummeted by 38.2% due to regulatory changes in India. Overall, equity trading and derivatives volumes reached their highest levels in five years. ~JJL
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 TradeStation's James Putra talks with JLN about options, crypto derivatives, AI and other trading tools at the OIC conference JohnLothianNews.com JLN spoke with James Putra, vice president and head of product at TradeStation, at the Options Industry Conference in Asheville, NC. The interview is part of the JLN Industry Leader video series sponsored by OCC. In the interview, Putra talked about the pressure on the spot crypto market and said that trying to squeeze it into traditional finance is not necessarily better for the individual customer, and brings high risk for that customer. Watch the video »  Agricultural Futures: Navigating the Fields - John Lothian News Watch Video »
| | | | | | Lead Stories | | | Miami International Holdings Announces Successful Launch of MIAX Sapphire Options Exchange
Miami International Holdings
Miami International Holdings, Inc. (MIH), a technology-driven leader in building and operating regulated financial markets across multiple asset classes and geographies, today announced the successful launch of MIAX Sapphire, its fourth national securities exchange for U.S. multi-listed options, with the rollout of options on its first symbol, IBM. MIAX Sapphire will begin offering trading in additional symbols in multiple phases on a weekly schedule commencing next week and continuing through October 21, 2024. The launch of the MIAX Sapphire electronic exchange will be followed by the opening of a physical trading floor in Miami, Florida, in 2025. MIAX Sapphire will be the first national securities exchange to establish operations in Miami. This space will include a next-generation trading floor, ancillary office space for MIAX employees and market participants, conference facilities and broadcast media space.
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Wall Street's Crowded Options Trade Survives Recent Stock Turmoil; Dispersion trade took a hit in last week's stock turmoil; Critics warn wager risks becoming too popular for its own good
Justina Lee and Lu Wang - Bloomberg
A popular hedge-fund trade betting on calm is reloading after the equity selloff, even as some critics warn it helped fuel the recent turmoil.
Once a niche strategy for specialized hedge funds, the so-called dispersion trade has boomed in the bull market era - netting big gains by riding placid equity indexes while wagering that volatility will hit underlying companies.
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Wall Street's Fear Gauge Spike 'Isn't That Surprising' in Panicked Market, Cboe Says; Options pros say VIX's record jump on Aug. 5 was a head fake; The index's sudden swoon sparks debate over its efficacy
Lu Wang - Bloomberg
The great volatility spike of 2024 was triggered by a sudden wave of deleveraging on Wall Street - rather than a collapse of economic confidence with echoes of the pandemic-era dark days. Now all market signs suggest that calm is set to return to US stocks after the recent mayhem. That, in a nutshell, is the benign message from the owner of the Cboe Volatility Index, which registered its largest intraday jump last Monday, in a move dubbed suspect by the former Treasury Secretary Lawrence Summers.
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****** Just SOP for the VIX.~JJL
Cboe expands US Treasury volatility tracking capabilities as US election looms; As part of its expansion, Cboe has begun publishing intraday values for its 20+ Year Treasury Bond ETF Volatility Basis Point Index.
Annabel Smith - The Trade
Cboe has moved to expand its intraday Treasury volatility tracking capabilities in the US in the build-up to upcoming regime shifts on the horizon. The expansion will mean that the exchange will publish intraday values for its 20+ Year Treasury Bond ETF Volatility Basis Point Index (VIXTLT). The index leverages Cboe's proprietary VIX Index methodology and provides participants with the ability to track 30-day expected volatility in the US Treasury market in real-time.
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Volatility funds lure investors as markets turn jittery
Patturaja Murugaboopathy and Gaurav Dogra - Reuters
Global managed volatility funds saw their first net inflows for more than a year last month, as markets reacted to growing concerns over the economic outlook, uncertainty around monetary policy, and bubble-like valuations in the technology sector.
According to LSEG Lipper data, managed volatility funds, which aim to minimize risks and provide stable returns during periods of uncertainty, recorded their first net inflows in 14 months, attracting $601 million in July.
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Market Volatility Is Back. Will It Last?; Investors are buckling up for more turbulence after last week's global drama interrupted an unusually calm period
David Uberti - The Wall Street Journal
Volatility is back in the stock market after a roughly 18-month slumber.
Turbulence has mounted since mid-July, culminating last week with the S&P 500 logging both its best and worst days since 2022. Traders have wound down some investments that thrived in calm conditions and pulled back from bets that the sideways action would persist.
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Fear fades in US stocks, but history shows quick return to calm unlikely
Saqib Iqbal Ahmed - Reuters
Panic appears to have faded following last week's outbreak of volatility in U.S. stocks, but if history is any guide, markets might remain jittery for months.
Wall Street's most closely watched gauge of investor anxiety, the Cboe Volatility Index (VIX) has rapidly eased after closing at a four-year high last week and stocks came screaming back following the year's worst tumble. The S&P 500 is up 3% from last week's lows, while the VIX hovers around 20, far below the Aug. 5 close of 38.57.
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Yen-Hedged ETF Suffers Exodus of Cash From Carry-Trade Fiasco; WisdomTree's DXJ saw biggest weekly outflow since 2018; ETF bets on Japanese stocks while hedging out yen volatility
Vildana Hajric and Emily Graffeo - Bloomberg
Investors spooked by the yen carry-trade blowup have pulled cash from a Japan-focused stock ETF that strips out moves in the country's currency.
The WisdomTree Japan Hedged Equity Fund (ticker DXJ) saw an outflow of more than $400 million last week, the most since 2018, data compiled by Bloomberg show. At the same time, short interest as a percentage of shares outstanding on the ETF rose to the highest since May, according to data from IHS Markit Ltd.
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| | | | | | Exchanges | | | OCC Welcomes MIAX Sapphire as Newest Options Exchange
OCC Public Relations
OCC, the world's largest equity derivatives clearing organization, today announced that MIAX Sapphire, LLC (MIAX Sapphire) has become an OCC participant exchange. MIAX Sapphire, owned by parent holding company Miami International Holdings, Inc. (MIH), launched operation of the MIAX Sapphire electronic exchange on August 12, 2024. MIAX Sapphire is MIAX's fourth U.S. listed options exchange. With the addition of MIAX Sapphire, OCC now provides clearing and settlement services to 21 exchanges and trading platforms for options, futures and securities lending transactions. "OCC congratulates MIH on the launch of its fourth listed options exchange," said Andrej Bolkovic, OCC Chief Executive Officer. "As the central counterparty clearinghouse for all U.S. listed options, we are pleased to offer our clearing and settlement capabilities to MIAX Sapphire and to support the exchange-traded options industry's continued growth."
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Cboe Global Markets Begins Publishing VIXTLT Index on August 12, 2024
Cboe Global Markets
Designed to provide VIX Index-like measure of U.S. Treasury market volatility; VIXTLT Index calculated using highly liquid, listed options on the iShares 20+ Year Treasury Bond ETF (TLT); Launch adds to Cboe's growing volatility index suite and derivatives-based index offerings; VIXTLT Index available in basis point measure. Cboe Global Markets, Inc. (Cboe: CBOE), the world's leading derivatives and securities exchange network, today announced it has begun publishing intraday values for the new Cboe 20+ Year Treasury Bond ETF Volatility Basis Point Index ("VIXTLT Index"). Leveraging Cboe's proprietary VIXÃ Index methodology, the VIXTLT Index provides market participants with the ability to track future (30-day) expected volatility in the U.S. Treasury market in real-time.
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New Equity Option Class
TMX
Bourse de Montreal Inc. (the Bourse) and Canadian Derivatives Clearing Corporation (CDCC)hereby inform you that at the opening of trading on Wednesday August 14, 2024, the following new option class will be listed: Ag Growth International Inc. (AFN).
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| | | | | | Regulation & Enforcement | | | SEC probe of B. Riley widens as struggling firm's stock drops more than 50% on profit warning
Josh Kosman - NY Post
The feds have widened a probe of financial irregularities at B. Riley, sources told The Post - even as the struggling Wall Street firm suspended its dividend and warned on profits Monday, sending its stock tumbling more than 50%. Short sellers in June and July continued to deliver information on B. Riley to the Securities and Exchange Commission - and the SEC has asked them for additional material in a continuing probe, according to emails and texts reviewed by The Post.
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CFTC's Gensler calls for overhaul of Libor
Reuters
The London interbank offered rate (Libor) needs to be replaced or revised, the chairman of the U.S. Commodity Futures Trading Commission said on Monday, adding that any future benchmark should be based on actual market rates rather than estimates.
"It is time for a new or revised benchmark - a healthy benchmark anchored in actual, observable market transactions," Gary Gensler said in the text of a speech released to Reuters shortly before he was due to deliver it to the European Parliament.
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| | | | | | Strategy | | | Term Structure
Cboe (Video)
Tim Biggam @delta_desk provides market updates in #Vol411, covering the #VIX futures term structure, upcoming earnings (including $NVDA) and more.
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| | | | | | Education | | | Understanding the Bid and Ask Prices for Options
OIC
Option prices are driven by all market participants, whether that is a bank, a fund manager, a market maker, or an individual investor.
The process of buying or selling an option begins when one of these market participants submits an order, such as a market order or a limit order, to their brokerage firm. The order then flows from the brokerage firm's platform to an exchange. Once an exchange receives the order it is sorted by class, series, bids, offers and the desired execution price. Depending on the price, one of three outcomes could take place:
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| | | | | | Miscellaneous | | | Hedge Funds Take Money From Each Other
Matt Levine - Bloomberg (Opinion)
There are only so many ways to invest in a company. If the company has a promising future ahead of it, you can buy its equity and get a stake in its success (or failure). If the company has a steady business with recurring cash flows, you can lend it money against those cash flows. If the company has some good assets, you can lend it money against those assets. Those are the main ideas. There are various hybrids. If you think the company could have a lot of upside but you want some downside protection - or you want to bet on volatility - there are convertible bonds. There are hybrid bank capital securities. A few other things.
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Wall Street's Trash Contains Buried Treasure; Investors buying index-fund castoffs could have made 74 times their money since 1991
Spencer Jakab - The Wall Street Journal
Rebound relationships are best avoided, but maybe not in the stock market. In a paper that starts out by stating that "no one enjoys getting dumped," two investing quants reveal some surprising, and potentially lucrative, traits of companies that have really let themselves go. With about half of the money invested in American stocks now sitting in index funds, and many active managers holding portfolios that resemble them-just try beating the market these days without "Magnificent 7" stocks such as Nvidia or Microsoft-index castoffs have a hard time meeting someone new.
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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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