| November 03, 2022 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | At The Trade's annual Leaders in Trading awards dinner last night in London, Louisa Paul accepted a lifetime achievement award and Dr. Robert Barnes was voted The Trade's first Industry Person of the Year. Paul is global head of equity dealing at Barings Asset Management and Barnes is the CEO of Turquoise. Congratulations to both.
There are more details below on the winners of The Trade's Leaders in Trading awards, including big wins by Cboe. The Trade also has a story saying Robert Barnes will leave Turquoise as CEO at the end of the year.
| | | | | | Lead Stories | | | Oil Options Traders Build a Huge Position on Higher Prices
Alex Longley - Bloomberg
In the oil options market, bets on higher prices are eclipsing bearish ones at a record pace, as traders brace for sanctions on Russian shipments.
For US crude futures, total call option open interest is 1.4 million contracts larger than puts -- the equivalent of 1.4 billion barrels. The gulf between the two recently grew to its widest since at least 1996, according to data compiled by Bloomberg.
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Traders Swarm Bearish Options on Meta Platforms
Gunjan Banerji - WSJ
There's been a frenzy in options tied to Meta Platforms during the selloff that has dragged shares down 36% over the past month. Some of the most active days ever for put-option trading have occurred over the past week, according to Cboe Global Markets data.
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Traders scramble for protection after Fed spooks markets
Saqib Iqbal Ahmed - Reuters
Investors rushed to guard against further declines in U.S. stocks on Thursday, a day after the Federal Reserve dashed hopes for a downshift in the central bank's inflation-fighting rate hikes.
Trading in S&P 500 put options, typically used as a play in defensive positions, outnumbered calls, usually employed for upside wagers, 1.5-to-1 on Thursday afternoon, the most defensive the measure has been since mid-October, according to Trade Alert data.
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Shorting Against China Stock Markets Is Quickly Turning Dangerous
Sofia Horta e Costa and Ishika Mookerjee - Bloomberg
Betting that Chinese stocks will extend the world's worst run of losses just got a whole lot riskier.
A frenzied two-day rally in the nation's shares -- built on the flimsiest of speculation -- gives a small taste of how epic price moves will be if or when authorities in Beijing give a clear signal on ending their Covid-Zero policy.
/jlne.ws/3NFboyU
Volatility Lingers After Fed Meetings
Eric Wallerstein - WSJ
Stocks dropped violently Wednesday after Federal Reserve Chairman Jerome Powell's speech, and volatility may continue in coming days, notes Henry Homes, managing director at Nomura.
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The rise and rise of currency hedging raises a financial system risk; Investor moves to protect against foreign exchange volatility might be spurring unsustainable imbalances between countries
Antonio Foglia - Financial Times
The dollar has strengthened by about 20 per cent in the past year and pundits generally attribute this performance to rising interest rates and to "haven" buying at times of turbulence. While the first reason seems more accurate, the main channel through which rising US rates impact the dollar is little understood despite the vast implications it has for the current set up of the international monetary system
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Investors are raising the odds of a more dovish December rate hike of 50 basis points as the Fed says it will consider 'cumulative tightening' efforts
Carla Mozee - Business Insider
Investors on Wednesday were pricing in a step-down in the size of the Federal Reserve's interest-rate increase in December, foreseeing a hike of 50 basis points as they latched onto new language included in the central bank's latest policy announcement.
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Stock Hedges That Won Big in 2020 Misfire in This Downturn
Lu Wang - Bloomberg
Buying the dip. Sheltering in megacaps. Playing a Fed pivot. Things that paid off in the last equity bear market have been a ticket to the poorhouse during this one.
Another professional strategy that isn't aging well is buying crash insurance -- stock hedges designed to pay off in a sudden downturn, like in 2020. The trade in this year's excruciating slog is doing little to cushion portfolios, in some cases making things worse.
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| | | | | | Exchanges | | | FIA makes recommendations on circuit breakers
FIA
The current energy crisis has been driving prices of natural gas to record levels, impacting households and businesses. The European Commission has reacted by tasking the European Securities and Market Authorities to review different areas of the market, including the use of circuit breakers by energy trading venues. In a letter to ESMA and the European Commission, FIA makes recommendations and emphasizes controls should not be used to cap prices.
In its letter, FIA noted it was "generally supportive of exchange circuit breakers when used in the context of managing disorderly markets," but warned that "they should not be used as tools to control or cap prices and if improperly implemented and calibrated these tools can be damaging to the market and the wider financial system."
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The TRADE announces Leaders in Trading 2022 award-winners; Almost 300 industry leaders gathered at The Savoy hotel in London to celebrate their achievements throughout the year.
Editors - The Trade
The TRADE is delighted to announce the winners of this year's Leaders in Trading awards, with the recipients honoured at a ceremony held last night at The Savoy, London. Nearly 300 industry leaders joined The TRADE in a sold-out room to recognise the year's leading individuals and firms within the industry, with 36 awards handed out across buy-side, editors' choice, algorithmic trading, EMS and fintech categories.
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***** The Trade said: "In the trading venues arena, Aquis Exchange, Cboe BIDS Europe, LedgerEdge and LSEG (Refinitiv FXall) each took home Outstanding Trading Venue awards, while Cboe Global was crowned overall Outstanding Exchange Group. big xyt claimed the crown for Outstanding Market Data Provider, and elsewhere, Instinet collected the Outstanding Trading Technology Provider award."~JJL
October 2022 figures at Eurex; Index derivatives continued their positive trend (up 24 percent) in October; Total repo volumes up 32 percent y-o-y; Notional outstanding OTC interest rate swaps with growth over 20 percent
Eurex
Index derivatives continued their strong year-on-year growth, up 24 percent from 56.9 million traded contracts to 70.4 million. Interest rate derivatives increased by a further 2 percent compared with the high level of the previous year, from 52.2 million traded contracts to 53.2 million. Equity derivatives contracts traded fell by 31 percent in October, from 22.5 million to 15.6 million compared to the same month last year. Total contracts traded at Eurex grew by 6 percent from 131.8 to 139.4 million.
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| | | | | | Strategy | | | Selling Losing Stocks Can Lower Your Taxes. Using Options Is a Less Risky Way to Buy Them Back.
Steven M. Sears - Barron's
One of the most fascinating attributes of investing is that active participants must constantly adjust their focus to identify emerging opportunities and risks. This challenge makes investing like playing a perpetual game of intellectual football, and it is why so many skilled practitioners humbly refer to themselves as studentsârather than mastersâof the markets.
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MSIM option strategy set for payout
Ben St. Clair - Risk.net
After years of lost option premiums, Morgan Stanley Investment Management's bet on a weakened Chinese renminbi may finally pay off.
The recent drop in the offshore Chinese currency against the dollar has propelled one of the manager's option positions into the money, making it the first time any position has been close to paying out in five years of running the strategy.
/jlne.ws/3sXZDKa
| | | | | | Miscellaneous | | | The Stock Market's New Big Problem? Shrinking Profit Margins.
Al Root - Barron's
Stocks are facing lots of headwinds these days. The dollar is strong, a thorn for those companies that import materials and those with customers overseas. Interest rates are rising, which means slower economic growth and higher interest expense. And cost inflation and parts shortages aren't going away soon.
But something else is going to matter much more to investors in the coming year: shrinking profit margins. The writing is on the wall, evident in this season's outlooks.
/jlne.ws/3WwQ3vB
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