| March 11, 2024 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | One of the Most Infamous Trades on Wall Street Is Roaring Back; Billions pour into ETFs selling options in huge bet on stock calm
Lu Wang and Justina Lee - Bloomberg
Forget the artificial-intelligence frenzy - the most-exciting trade on Wall Street right now might just be betting on boring. As winners of the AI boom like Nvidia Corp. power benchmark stock gauges to record after record, a less remarked-upon phenomenon has been unfolding at the heart of the US market: Investors are sinking vast sums into strategies whose performance hinges on enduring equity calm. Known as short-volatility bets, they were a key factor in the stock plunge of early 2018 when they wiped out in epic fashion. Now they're back in a different guise - and at a much, much bigger scale.
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Options players ready for market swings after US inflation data
Saqib Iqbal Ahmed - Reuters
Traders in the U.S. equity options market have grown skittish ahead of Tuesday's release of inflation data that could sway the Federal Reserve's monetary policy trajectory.
Options on the S&P 500-tracking SPDR S&P 500 Trust ETF (SPY.P), opens new tab were primed for a 1% swing in the fund's shares in either direction by the end of trading on Tuesday. That's larger than the 0.7% move traders had been pricing for stocks ahead of the January inflation report, according to a Cantor Fitzgerald analysis.
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Eighty Percent of the World's Stock Options Aren't Traded Where You Think; Bitcoin and GameStop made headlines. But an even wilder speculative mania has emerged in India.
Megha Mandavia - The Wall Street Journal
U.S. markets have been no stranger to meme-driven, casino-like trading in recent years. But on the other side of the world, a stock speculation boom is unfolding that makes GameStop and bitcoin look tame-or, at least, well-domesticated. India accounted for a staggering 78% of equity options contracts traded worldwide in 2023, according to data from the Futures Industry Association (FIA), a global derivatives markets policy advocacy organization. The number of stock index options traded there reached 84.3 billion contracts last year, up 153% from 2022. Total futures and options turnover touched a notional value of $4.5 trillion on the National Stock Exchange on Thursday.
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BlackRock to Buy SpiderRock as Firm Expands Wealth Management
Silla Brush - Bloomberg
BlackRock Inc. said it's acquiring SpiderRock Advisors, an asset-management and technology firm, to expand its customized investing strategies to wealthy clients. The deal will increase BlackRock's ability to offer tax-efficient investment services - especially those that rely on options trading, BlackRock said in a statement Friday. In 2021, the asset manager made a minority investment SpiderRock, which oversees about $4.8 billion of assets for investment advisers, family offices and other clients. SpiderRock "can provide advisers with a comprehensive suite of customization capabilities that help solve clients' unique challenges, such as income generation, downside protection, and tax-efficiency through the use of options," Eve Cout, head of portfolio design and solutions in BlackRock's US Wealth Advisory business, said in the statement.
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Return of Animal Spirits? Bitcoin Traders Lock $20M in the $200K Call Option
Omkar Godbole - CoinDesk
Animal spirits seem to have returned to the market, spurring a 2021-like interest in bitcoin {{BTC}} options that would pay off if the cryptocurrency's price tripled in the coming months. On Friday, the Deribit-listed bitcoin call option at the $200,000 strike price had a notional open interest of over $20 million. The strike price is almost three times bitcoin's going market rate of $67,000. Of the total tally, $14.6 million is locked in the $200,000 call expiring on Dec. 27, while the rest is concentrated in June and September expiry strikes, according to data source Deribit Metrics.
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Wall Street's 'Fear Gauge' Jumps Ahead of Inflation Data
Connor Smith - The Wall Street Journal
The market's fear gauge spiked on Monday ahead of key inflation readings later this week.
The CBOE Volatility Index, or Vix, briefly crossed 16 on Monday for the first time since Feb. 21, according to Dow Jones Market Data. The measure pulled back in early afternoon trading, but was still up 5.1%, to 15.49
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Funds ink all-time bearish soybean bets off unprecedented selling streak
Karen Braun - Reuters
Speculators have been selling Chicago-traded soybeans since mid-November, and that finally culminated in a record position last week as global stockpiles swell.
In the week ended March 5, money managers lifted their net short position in CBOT soybean futures and options to a record 171,999 contracts from 160,653 a week earlier. That replaced the prior all-time net short of 168,835 contracts from May 2019.
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Bitcoin Soars to a Record. The Next Stop Could Be $100,000.
Jack Denton - Barron's
Bitcoin and other cryptocurrencies rose Monday, with the largest digital asset hitting a record high as investors continued to pile into spot Bitcoin exchange-traded funds and push crypto prices higher.
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| | | | | | Exchanges | | | SGX Group reports market statistics for February 2024
SGX Group
Deep derivatives liquidity across multiple asset classes through Lunar New Year
Securities market turnover grows despite fewer trading days. Singapore Exchange (SGX Group) today released its market statistics for February 2024. Derivatives volume rose across multiple asset classes as global market participants leaned on SGX Group's trusted marketplace for continued access through the extended Lunar New Year holidays in Asia.
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TMX Group Equity Financing Statistics - February 2024
TMX Group
TMX Group today announced its financing activity on Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV) for February 2024.TSX welcomed 11 new issuers in February 2024, compared with nine in the previous month and 14 in February 2023. The new listings were six exchange traded funds, two mining companies, one closed-end fund, one oil & gas company and one life sciences company. Total financings raised in February 2024 increased 1218% compared to the previous month, and were up 619% compared to February 2023. The total number of financings in February 2024 was 32, compared with 31 the previous month and 36 in February 2023.
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Euronext announces volumes for February 2024
Euronext
Amsterdam, Brussels, Dublin, Lisbon, Milan, Oslo and Paris - 8 March 2024 - Euronext, the leading pan-European market infrastructure, today announced trading volumes for February 2024.
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Trader Alert 24-20: (*Reminder*) MEMX Options is Updating its Instrument Directory File and the Symbology Required in the Portal Risk Management Tool Monday March 11, 2024
MEMX
As previously announced, MEMX Options is updating its Instrument Directory file and making changes to the symbology required in the Firm and Risk Management User Portal tools. The changes are currently available in the MEMX Options Development Environment (MODE) and production release date is Monday, March 11, 2024.
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| | | | | | Regulation & Enforcement | | | Competing with conviction, respecting the contest
FIA
Opening remarks of FIA President and CEO Walt Lukken at the International Futures Industry Conference
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Hedge funds threaten to pull India investments due to regulatory crackdown; Rules introduced in response to Adani short seller report would force funds to disclose 'granular details' of end investors
Costas Mourselas and John Reed - Financial Times
Hedge funds are threatening to pull investments from India because of controversial new rules introduced in response to last year's short seller attack on Adani, one of the country's biggest companies. The rules, from Indian markets regulator Sebi, require big foreign investors - including hedge funds - betting on Indian stocks to reveal all their end investors, something the funds argue would create "severe practical difficulties" for funds and mark a stark departure from international practice.
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South Korea says banks 'mis-sold' China-linked derivatives; Financial regulator considers fixed-income securities ban following probe
Song Jung-a - Financial Times
South Korea's financial regulator is considering banning all equity-linked securities after finding that the country's biggest banks and brokerages misled retail investors over products tied to Chinese stocks. The Financial Supervisory Service's five-month investigation into five banks and six brokerages found poor regulatory compliance and a lack of consumer protection for sales of securities linked to the Hang Seng China Enterprises index.
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| | | | | | Strategy | | | Options ETFs give investors a handy hedge; The popular covered call strategy aims to provide an enhanced income and protect against changing sentiment
David Stevenson - Financial Times
As stock markets in the US surge, many increasingly cautious local private investors are turning to options and derivatives to protect against changing sentiment. There has been an explosion in funds in the US that use options in one form or another to act as a hedge, be that through so-called covered call writing, or more structured defined outcomes. Options are hugely popular on US retail platforms such as Robinhood but derivatives are also finding their way into more mainstream products, such as exchange traded funds.
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Apple
Cboe (Video)
In #Vol411, Joel Hawthorne @louiswinthrop fills us in on Friday's trading action and lets us know economic data to be on the lookout for this week including CPI on Tuesday, crude oil inventory on Wednesday and retail sales on Thursday.
/jlne.ws/4a6Ves6
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