| November 02, 2022 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Options Traders Had the Fed Pegged. Then the S&P 500 Took Off; Little demand for crash-up, crash-down protection: Kochuba; Large long and short positions are offsetting each other: Citi
Elena Popina - Bloomberg
Betting on lower volatility coming out of this Federal Reserve meeting seemed like a sure thing to options pros just a couple of weeks ago, as dovish signals were seemingly emerging everywhere. But now they aren't so sure. A two-week, 8% rally in the S&P 500 has left traders with little conviction as to what will happen next. While many closed out their put contracts during the rebound, they didn't gorge on calls in the expectation that the gains would continue, based on the cost of bearish options versus bullish ones analyzed by SpotGamma.
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Biggest Crypto Options Exchange Deribit Hacked for $28 Million - What Happened?
Jaroslaw Adamowski - CryptoNews
Panama-based crypto derivatives exchange Deribit has suffered a hacking attack estimated to be worth some $28 million. The exchange claims that its customers' funds remain safe despite the latest attack.
"Deribit hot wallet compromised, but client funds are safe and loss is covered by company reserves," the business said in a tweet.
/jlne.ws/3DVQLet
The volatility laundering, return manipulation and 'phoney happiness' of private equity; Are investors the mark, or in on it?
Robin Wigglesworth - Financial Times
The widening performance gap between public and private markets is a huge topic these days. Investors are often seen as the gormless dupes falling for the "return manipulation" of cunning private equity tycoons. But what if they are co-conspirators? That's what a new paper from three academics at the University of Florida argues. Based on nearly two decades worth of private equity real estate funds data Blake Jackson, David Ling and Andy Naranjo conclude that "private equity fund managers manipulate returns to cater to their investors".
/jlne.ws/3FCIyNv
***** Another must-read Robin Wigglesworth piece.~JJL
Crypto Winter Spurs Delisting of Bitcoin, Ether ETFs in Australia; Cosmos pulls funds that were launched as crypto markets slid; The move is the latest leg of a global retrenchment in crypto
Sunil Jagtiani - Bloomberg
A clutch of crypto exchange-traded funds launched with much fanfare in Australia are headed for delisting, becoming the latest casualties of the this year's digital-asset rout. The management teams behind the Cosmos Purpose Bitcoin Access ETF, Cosmos Purpose Ethereum Access ETF and Cosmos Global Digital Miners Access ETF applied to revoke their quotations on the exchange run by Cboe Australia Pty.
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Inflation is in its final stages and could soon roll over, causing bond yields to peak and stocks to stabilize, JPMorgan says
Jennifer Sor - Business Insider
"We believe that the disinflation phase has already begun, and that inflation prints, both the headline and core, will be meaningfully lower in 3-6 months' time," analysts wrote in a note on Monday. The bank predicted headline inflation to clock in at 5.7% and core inflation to clock in at 5.3% in the first quarter of next year, compared to current figures of 8.2% and 6.6% respectively.
Inflation hits the economy in four phrases, JPMorgan analysts said, with prices first surging in commodities, then goods, then services, and finally in wages.
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US ETFs draw almost $500bn of inflows despite grim year for Wall St
Steve Johnson - Financial Times
US exchange traded funds have pulled in almost $500bn in new client money this year as investors continue a powerful shift into the vehicles despite a historic pullback in stock and bond markets.
The inflows are well below last year's full-year tally of $935bn but in line to overtake the record before that of $501bn in 2020, according to data from the Investment Company Institute through October 26. In contrast, long-term US mutual funds â which exclude vehicles that act as alternatives to holding cash â have seen net outflows of $790bn in 2022, far worse than the decline of $59bn last year and $484bn in 2020.
/jlne.ws/3SWpH2P
| | | | | | Exchanges | | | OCC October 2022 Total Volume Up 10.2% Year-Over-Year, Fifth Highest Month on Record
OCC
OCC, the world's largest equity derivatives clearing organization, announced today that year-to-date average daily volume through October 2022 was 41.1 million contracts, up 5.6 percent compared to year-to-date average daily volume through October 2021. Total volume was 910.0 million contracts, up 10.2 percent compared to October 2021 and the fifth highest month in OCC's history. Highlights: ETF options cleared contract volume up 57.4% year-over-year; Index options cleared contract volume up 74.0% year-over-year; Stock Loan transaction volume up 11.6% year-over-year.
/jlne.ws/3DR0ClE
CME Group Reports 11% ADV Growth in October 2022
Highest-ever October ADV; Equity Index volume up 59%, with record E-mini S&P 500 options contracts; Record SOFR options volume and OI
CME Group
CME Group, the world's leading derivatives marketplace, today reported its October 2022 market statistics, showing average daily volume (ADV) increased 11% to 22.7 million contracts during the month, representing the company's highest October volume on record. Market statistics are available in greater detail at https://cmegroupinc.gcs-web.com/monthly-volume.
/jlne.ws/3FzQHlS
Global RMC 2022 Recap
Cboe
Cboe hosted its first-ever global Risk Management Conference (RMC) in Reykjavik, Iceland in October, gathering people from around the world and across the industry to discuss risk management, trading strategies, challenges and more.
Notably, Cboe made two exciting announcements at RMC. First, Cboe announced the creation of the Cboe S&P 500 Dispersion Index, which is intended to represent the implied dispersion among S&P 500 constituents over a 1-month horizon, based on the prices of single stock and index options. The creation of the index was a collaboration between Cboe Labs and S&P Dow Jones Indices (S&P DJI), underscoring the strength of Cboe and S&P DJI's long-standing relationship and highlighting the companies' shared commitment to drive innovation through rigorous data analysis and academic research. During RMC, S&P DJI's Tim Edwards also presented an analysis of dispersion.
/jlne.ws/3NvKKrV
Payment for Order Flow to Brokers Fell as Investor Activity Ebbed, Data Shows
Alexander Osipovich - WSJ
Payment for order flow became less lucrative for brokerages as their customers got less active over the past year, bruised by the market downturn and distracted from their trading apps by return-to-office mandates.
Order-flow revenues at the dozen largest U.S. retail brokerages were $767.5 million in the third quarter, a decline of 13% from the same period in 2021, according to data compiled by Larry Tabb, head of market-structure research at Bloomberg Intelligence. The data is based on mandatory disclosures by brokers that come out a month after each quarter ends.
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| | | | | | Regulation & Enforcement | | | FCA prosecutes five individuals for role in 'all-or-nothing' investment scheme
FCA
It is alleged that between June 2016 and January 2020 Cameron Vickers, Raheel Mirza and Opeyemi Solaja (aka Opeyemi Olaja) ran a London based company called Bespoke Markets Group which defrauded GBP1.2 million from UK investors. It is alleged that that money was used to fund their lifestyles, rather than the binary options investments that were advertised. They were each charged with offences under the Financial Services and Markets Act 2000, the Proceeds of Crime Act 2002 and an offence of conspiracy to defraud contrary to common law.
/jlne.ws/3UbTZjg
| | | | | | Strategy | | | Risky Trading Strategy Is Growing in Popularity in 2022's Wild Stock Market
Lu Wang - Bloomberg
It happens in a flash: The S&P 500 turns on a dime, and piranha-like options traders pile into short-dated contracts in a dash to harvest a quick advantage.
Tuesday reprised a pattern that has been visible for months. As the S&P 500 reversed a 1% gain in a violent session right before the Federal Reserve meeting, the turbulence fed a trading frenzy in options that expire within the next 24 hours. Such contracts dominated the ranks of the most traded, making up half of the index's total volume.
/jlne.ws/3T2lSt7
How to Trade an Unusually Boring Bitcoin; With an asset class steeped in volatility, how are investors reacting when there is no fluctuation?
Victoria Vergolina - Bloomberg
Crypto is notorious for its volatility. All its wild swings in prices have become a trademark of the market. And it's also something that has for years now shaped the trading behaviors of investors looking to make a quick profit. But what happens when the market's largest digital asset, Bitcoin, starts losing its volatility?
/jlne.ws/3fpufkE
The best play on the Fed decision may be a nonplay, this industry veteran says
Barbara Kollmeyer - MarketWatch
It's go-time for the Fed, which is expected to deliver a fourth straight jumbo hike, though obviously bigger questions hang over December onward plans. Wall Street is understandably on the fence, especially after Tuesday's batch of good-is-bad data.
Our call of the day from Stuck in the Middle blogger, Mr. Blonde, offers a simple strategy on what to do after three in four weeks of stock gains and on what he expects will be a "more of the same" Fed message.
Nothing.
/jlne.ws/3UhxpFY
| | | | | | Events | | | SIFMA is holding a Listed Options Symposium on November 9 at etc.venues, 360 Madison Avenue, New York, NY from 9:15 a.m. - 6:00 p.m. ET. After a welcome from SIFMA's Managing Director, Equity and Options Market Structure Ellen Greene, Cboe Global Markets' Henry Schwartz will give a keynote address to kick things off. We mentioned this yesterday, but Henry deserves a second plug as he is always interesting and as you can see from below, options trading is doing rather well.
| | | | | | Miscellaneous | | | US Banks Reported $1 Billion in 2021 Ransomware Payments
Jack Gillum - Bloomberg
US financial institutions reported nearly $1.2 billion on likely ransomware-related payments last year, most commonly in response to breaches originating with Russian criminal groups, according to the Treasury Department.
The payments more than doubled from 2020, underscoring the pernicious damage that ransomware continues to wreak on the private sector. The Financial Crimes Enforcement Network, or FinCEN, said its analysis "indicates that ransomware continues to pose a significant threat to U.S. critical infrastructure sectors, businesses and the public."
/jlne.ws/3NwWomk
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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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| | | Jeff Bergstrom
Editor
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