| February 24, 2022 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Oil Price's Rally Through $100 Sparks Payday in Options Markets
Alex Longley and Michael Roschnotti - Bloomberg
Oil's rally through $100 a barrel has brought millions of dollars worth of oil options into the money.
In total there are about 75 million barrels worth of call options at $100 for May, as well as $95 and $100 for June. Those contracts have surged in value as they would now mostly pay out at expiry with outright prices up between $7 and $8 on the day. There are also about 12 million barrels of April WTI $100 calls.
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Wall Street's 'Fear Gauge' Skyrockets as Investors React to Russian Invasion
Jack Denton - Barron's
Wall Street's so-called "fear gauge" skyrocketed Thursday as investors reacted to the Russian invasion of Ukraine.
The Cboe Volatility Index âknown as the VIXâjumped 17% to above 36, and briefly topped 37.5, hitting its highest level since a spike in January.
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Wall Street's Fear Gauge Climbs to Highest in a Year
Caitlin Ostroff - WSJ
A key measure of volatility jumped to its highest level in a year as stock futures pointed to a steep selloff in broader markets and tech stocks opening in a bear market.
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Volatility Market Keeps Its Cool Amid Ukraine-Invasion Shock
Elena Popina - Bloomberg
As investors exit risky assets following Russia's attack on Ukraine, traders in the options market appear to be keeping their cool.
While anxiety is growing as the crisis escalates, the type of panic similar to major risk-off events of the past hasn't materialized yet. The front-month futures contract on the Cboe VIX Index, which measures expected swings in the S&P 500 Index, jumped to 30.4 on Thursday afternoon. That took it to about where it traded in January 2021, when the market was in the middle of the meme-stock frenzy.
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Russian Attack on Ukraine Roils Stock, Energy Markets
WSJ
Investors pushed down stocks and lifted the prices of oil, gold and government bonds, after Russian missiles and airstrikes hit Ukraine's capital, Kyiv, and dozens of other cities across the country.
The Dow Jones Industrial Average fell about 342 points, or 1%. The S&P 500 was about flat; it reached correction territory earlier in the week. The Nasdaq was recently trading up 1.4%. The Cboe Volatility Index rose to the highest level in over 15 months.
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Saxo Bank Issues Warning about Ruble Volatility; Russian assets are adversely affected by geopolitical concerns; Saxo Bank may suspend transactions or introduce restrictions in such instruments
Finance Magnates
Saxo Bank, a popular Danish investment bank specializing in online trading and investment, has commented about challenges associated with Russia-related assets' volatility.
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Emerging Markets Bear Brunt of Selling as Risk Premium Soars
Sydney Maki - Bloomberg
Emerging markets are bearing the brunt of investors' flight from risk assets after Russia staged a full-scale invasion of Ukraine.
The benchmark for developing equities slumped by the most since the coronavirus first shocked global markets about two years ago, while the ruble led losses in all 24 emerging currencies tracked by Bloomberg. An across-the-board selloff gripped bonds, sending the risk premium on developing-nation government debt to its highest since October 2020.
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Russia-Ukraine Crisis: Fear Index India Vix Hits 20-Month High Amid Heightened Geopolitical Tensions
Sandeep Singh - CNBC
As heightened geopolitical tensions sent global markets tumbling on Thursday, Dalal Street's own gauge of volatility hit the highest level recorded in more than 20 months. The NSE's India VIX index - also known in market parlance as the fear gauge - surged 32 percent to finish the day at 30.3, having almost touched 34 during the session.
That made it the India VIX's biggest jump since June 17, 2020 - both intraday and at the close.
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| | | | | | Exchanges | | | LCH SA connects EquityClear to Cboe and Aquis Exchange Europe; Additional routes to clear European equities will offer users increased margining and settlement netting efficiencies.
Wesley Bray - The Trade
The London Stock Exchange's France-based clearing house LCH SA has connected its EquityClear service to Cboe Europe - including its off-book trade reporting service BXTR - and Aquis Exchange Europe. Using EquityClear, customers trading on these venues and those reporting on BXTR can clear, net and settle trades at LCH SA alongside equities traded on Cboe UK, Turquoise Europe and Turquoise UK.
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| | | | | | Regulation & Enforcement | | | ISDA responds to BoE, FCA on UK EMIR
ISDA
ISDA has responded to the joint Bank of England (BoE) and Financial Conduct Authority (FCA) consultation paper on changes to reporting requirements, procedures for data quality and registration of trade repositories under the UK's European Market Infrastructure Regulation (EMIR). This consultation puts forward proposals for aligning the UK's derivatives reporting framework with the Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions' international guidance, measures for mandatory delegated reporting requirements, counterparty notifications and reconciliations processes, and the use of XML schemas and global identifiers.
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| | | | | | Strategy | | | How to Cash In on Rising Anxiety in the Stock Market Using Options
Steven M. Sears - Barron's
Buy fear.
Should a shooting war erupt in Ukraine, stock prices will likely tumble and bearish options premiums will likely surge.
The combination of battered equities and elevated implied volatility should present long-term investors with opportunities to increase positions in stocks that they own, or to establish positions in stocks they have waited to buy as prices rallied ever higher.
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Retail Traders Buy Gold, VIX ETFs As Russia Invades Ukraine
Natasha Dailey - Business Insider
Retail traders are seeking safe havens as the Russia-Ukraine conflict worsens with Vladimir Putin's forces launching an attack on the eastern European country overnight.
A report from Vanda Research found retail investors have rotated heavily into gold ETFs amid the worsening Russia-Ukraine crisis. The precious metal, which is viewed as a safe-haven asset in times of crisis, saw its biggest weekly inflows since the trough of the pandemic, the researchers said. On Thursday alone, gold surged to its highest level in more than a year.
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Opinion: Stick by the VIX now that stock-market volatility has more than doubled
Mark Hulbert - MarketWatch
If you follow a traditional 60%/40% stock-bond portfolio allocation, you currently should be just 38% invested in equities â 63% of 60%. If your target equity allocation instead is 80%, you should currently be 51% invested in stocks.
These are the implications of a market timing model that keys off changes in the CBOE's Volatility Index, or VIX VIX, 2.35% for short. The model calls for below-average exposure when the VIX is above average, as it is now: the VIX stands at 31.02, more than double the 14.84 low to which this sunk to last fall.
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War Is Terrifying for Markets. Here Is Some Advice for Investors.
Jack Denton - Barron's
First and foremost, Russia's attack on Ukraine threatens a humanitarian crisis of catastrophic proportions. The conflict already has led to the loss of life and has the potential to displace millions of people.
As investors have been witnessing, war in Eastern Europe also poses financial risks. Sanctions on Russian oil would cause elevated crude prices and stoke inflationary fears at a time when consumers already face rising prices. It would make the job by central banks of fighting inflation even harder, and make the interest rate hikes expected from the Federal Reserve this year â already a headwind for stocks â even more painful.
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| | | Jeff Bergstrom
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