| | | | | | | February 24, 2025 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Options Traders Line Up Hedges Before Pivotal Nvidia Earnings; Outstanding VIX calls near highest since 2023 relative to puts; Stock correlation close to record low helps dampen volatility
Natalia Kniazhevich - Bloomberg
Even before Friday's slide jolted the US stock market out of its calm, some traders were preparing for unrest.
While the S&P 500 Index was hovering near an all-time high and the Cboe Volatility Index was well below its five-year average, under the surface a more skeptical picture was shaping up - one that's been already vindicated by the biggest selloff in two months. Last week, the ratio of outstanding VIX call options relative to puts neared its highest level since September 2023, with more than 1 million calls changing hands on Tuesday.
/jlne.ws/3CUjHGb
SPX Option Volumes Hit Record High as Volatility Picks Up
Mandy Xu - Cboe
Implied volatilities gained across asset classes last week on the back of weaker-than-expected US economic data. Equity volatility jumped higher, with the VIX index up 3.4 pts to 18.2% (80th percentile high) as SPX option volumes hit an all-time high on Friday. Over 4.74M contracts traded ($2.85T notional) with 55% of the volume coming from 0DTE contracts. Skew steepened as demand for puts increased, with SPX 3M skew now trading in the 94th percentile high.
/jlne.ws/4gRuped
Hedge funds exit tech, media stocks at fastest pace in six months, Goldman Sachs says
Nell Mackenzie - Reuters
Hedge funds exited U.S. tech and media stocks in the two weeks to February 21 at the fastest pace in six months, according to Goldman Sachs, just as Nvidia (NVDA.O), opens new tab, one of the biggest tech firms by market capitalisation, readies to report earnings.
Nvidia's profit report this week is seen as a bellwether of the burgeoning artificial intelligence (AI) industry. The AI and graphics chipmaker is the world's second most valuable company, with a 6.3% weight on the S&P 500 (.SPX), opens new tab, according to LSEG. Its shares have skyrocketed over 550% over the last two years.
/jlne.ws/41b6II9
Soft Economic Data Rekindles Volatility
Krystal Hur - The Wall Street Journal
A touch of volatility is creeping back into the stock market.
All three major equity indexes fell more than 1.5% on Friday, following lackluster economic data. That also boosted expectations for greater swings ahead in the stock market.
The Cboe Volatility Index, or VIX, jumped to end the week and rose further Monday, to hover around its highest level this year. The VIX, dubbed Wall Street's fear gauge, uses options prices tied to the S&P 500 to measure expected volatility in the index.
/jlne.ws/3CUkqan
CME Is Targeting Retail Traders With Micro Corn, Soy Contracts
Michael Hirtzer - Bloomberg
CME Group wants to give retail investors an opportunity to trade corn and soybeans - without the risk of taking delivery of thousands of bushels if they hang on to a contract for too long. Building off last year's record futures and options volume in agriculture, the exchange is launching five new "micro" contracts for farm commodities that will trade at one-tenth the size of its standard offerings. The contracts, which start trading Monday, are also cash-settled instead of the physical-delivery system for the legacy products.
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Geopolitical rupture sparks quiet market rebellion; It does not take a deep scratch beneath the surface to uncover investor nerves
Katie Martin - Financial Times
As the transatlantic alliance unravels before our eyes, the ups and downs (mostly ups) in markets give the impression investors are humming a tune: "It's the end of the world as we know it, and I feel fine." Matters of war and peace have, of course, dominated the week's news. Donald Trump and his administration have picked a side in the conflict in Ukraine, and to the astonishment of Europe, it is Russia's. Trump's assertions that Ukraine is at fault for Russia's invasion and that its president, Volodymyr Zelenskyy, is a dictator, mark a shocking nadir for the postwar order. The alliances that have sought to keep the peace for decades are at best disrupted and deeply damaged. And yet, at first flush, it appears that investors are saying "la la la, can't hear you". Major markets are performing well, and many typical signs of fear are absent. The question that keeps cropping up is when this trend will break.
/jlne.ws/4hPV5xe
Crypto derivatives a missing piece in Hong Kong's virtual-asset push, Deribit says
South China Morning Post
Deribit, the world's largest cryptocurrency derivatives exchange, aims to expand in Hong Kong, a sign of momentum as the market regulator looks to make the city a hub for virtual assets. The Dubai-based company was drawn to Hong Kong because of its position as an international financial hub and its vibrant community of family offices and asset managers, which are increasingly interested in cryptocurrencies, said Jean-David Pequignot, the firm's chief commercial officer, who is based in the city.
/jlne.ws/3F29zLU
Crypto companies boost sports spending after getting Trump bump; Twenty-two sponsorship deals have been inked with sports groups this year
Nikou Asgari and Samuel Agini in London - Financial Times
Crypto companies are increasing their sports investments and sponsorships as they seek to capitalise on renewed enthusiasm for the industry after Donald Trump's return to the White House. Some of the most high-profile transactions this month included stablecoin group Tether buying a 5 per cent stake in Juventus, Italy's most successful football club with 36 league titles, while crypto exchange Gato.io struck a branding deal with Formula One racing team Red Bull Racing.
/jlne.ws/3EMSYvy
| | | | | | Exchanges | | | Robinhood Plans Ambitious Crypto Expansion Under Trump Administration; Trading platform made famous during meme-stock mania wants to diversify its digital-currency business into areas including potential tokenization of equities
Mark Maurer - The Wall Street Journal
Robinhood Markets is banking on a major expansion of its cryptocurrency trading business under a more supportive Trump administration as it continues to diversify beyond traditional brokerage services. The Menlo Park, Calif.-based company made its name during the craze over meme stocks such as GameStop, but in recent years has moved into retirement accounts, offered contracts that allowed investors to bet on the outcome of the U.S. presidential election and released a credit card. Last year it agreed to acquire crypto exchange Bitstamp in a $200 million deal designed to expand the crypto offerings it introduced in 2018 and attract institutional clients.
/jlne.ws/4bgrgUe
CME Group and DTCC to Enhance Existing Cross-Margining Arrangement, Extending Benefits to End Users in December 2025
CME Group
CME Group, the world's leading derivatives marketplace, and The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, today confirmed plans to expand their existing cross-margining arrangement to provide increased margin savings and capital efficiencies to end users by December 2025. Subject to regulatory approval, this proposed enhancement to the long-standing CME-DTCC cross-margining arrangement will allow eligible end user clients at CME Group and the Government Securities Division (GSD) of DTCC's Fixed Income Clearing Corporation (FICC) to access capital efficiencies that are available when trading U.S. Treasury securities and CME Group interest rate futures that have offsetting risk exposures. To participate in end-user cross margining, clients will need to leverage the same dually registered Futures Commission Merchant (FCM) and broker/dealer (as registered with the SEC) at both CCPs. Aligning enhanced cross-margining for end-user customers with the regulatory timeline for expanded U.S. Treasury Clearing requirements encourages greater utilization of central clearing, therefore reducing systemic risk.
/jlne.ws/3XeFJdw
Crypto Market Thrives with Outstanding ETP Performance at SIX Swiss Exchange
SIX
SIX cements its position as the leading listing venue for exchange traded products (ETPs) and structured products with cryptocurrencies as underlyings, offering investors secure and convenient access to a growing range of products. Danielle Reischuk, Senior ETF & ETP Sales Manager, provides further insights.
/jlne.ws/4icTotO
| | | | | | Education | | | Implied Volatility vs IV Rank Comparison
tastylive (Video)
Tune in for a full market overview with options trading strategy and concept questions answered from the tastylive crew. They emphasize the importance of looking at IV Rank and implied volatility together, instead of just one or the other for market context. They exemplify this by looking at two similarly priced underlyings with very different implied volatility environments to highlight the extrinsic value premium associated with each stock. They also preview earnings this week in NVDA, CRM, and SNOW, all coming out after the market closes on Wednesday.
/jlne.ws/4bhFJiw
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