| September 13, 2022 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | 
Lex Luthringshausen Full Interview; Lex Talks IV Rank, IV Percentile, and Straddles With JLN's Alex Teng
JohnLothianNews.com
In this Options Discovery interview, Lex Luthringshausen from Tradier sits down with Alex Teng to discuss implied volatility rank and implied volatility percentile and how to use them when trading options. He later breaks down the options straddle trading strategy and talks about his personal experiences as a tradier. Lex is also very prominent in the world of options education. You can find him at OptionsBrewTV by Tradier on YouTube, where he creates content, holds workshops, and gives free seminars for options traders at all levels.
Watch the video »
| | | | | | Lead Stories | | | Stock Options Tape Sprinkled With Bullish Bets in Big Money FOMO
Lu Wang - Bloomberg
Skittish investors caught leaning by the latest equity bounce are flocking to the options market as a quick way to play catch-up.
In one talked-about trade Monday, someone spent about $80 million on call options wagering that the S&P 500 would rally to 4,300 by December, according to Piper Sandler & Co. That followed a flurry of buying on Friday that sent the Cboe equity put-call ratio to the biggest drop since July.
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Wall Street's 'fear gauge' surges as Nasdaq heads for worst day since June
Joseph Adinolfi - MarketWatch
The CBOE Volatility Index, otherwise known as the VIX, or Wall Street's "fear gauge", surged Tuesday morning as U.S. stocks plunged in the wake of a "game-changing" August inflation report. The VIX, which is derived from movements in near-dated S&P 500 options, was up nearly 9% on the session at 26 as U.S. stocks headed for their worst session in at least three weeks.
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It's amateur hour: how retail traders upended options market
Rob Mannix - Risk.net (Subscription)
Since the launch of Robinhood in 2015 with its "zero, nada, zilch" commission-free trading, professional investors have got used to the fast-growing presence in their markets of amateurs and their gambling, thrill-seeking, Reddit-message-board-fuelled behaviour - and what they can do to prices.
The brokerage's active users grew to 22.5 million by the end of 2021. And though the sway of retail traders in single-name options markets has faded from its peak during the meme-stock frenzies of early
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JP Morgan increases FX options dealer lead as Goldman slips
Joe Parsons - Risk.net (Subscription)
JP Morgan has extended its lead as top foreign exchange options dealer in the rankings for US mutual funds in the second quarter, holding close to half of the notionals with the client group and winning nearly twice the market share of its nearest competitor.
Mutual funds had shed a total of $3.2 billion of FX options notionals from their books as of the end of Q2, going down to $54.9 billion, with the largest cuts seen in Asia-Pacific currency pairs. The information is based on disclosures
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BofA Survey Shows Investors Fleeing Stocks Amid Recession Fears
Sagarika Jaisinghani - Bloomberg
Investors are fleeing equities en masse amid the specter of a recession, with allocations to stocks at record lows and cash exposure at all-time highs, a Bank of America Corp. survey showed.
A historically high 52% of respondents said they are underweight equities, while 62% are overweight cash, according to the bank's global fund manager survey, which included 212 participants with $616 billion under management in the week through Sept. 8.
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Wall Street plunges as inflation data stokes bets of large rate hikes
Devik Jain, Ankika Biswas and Sinéad Carew - Reuters
U.S. stocks slumped on Tuesday, with technology shares taking the biggest hit, after data showed monthly consumer prices unexpectedly rose in August, cementing bets of a third straight 75-basis-point rate hike from the Federal Reserve next week.
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Fed Seen Being Aggressive on Rates for Longer After US Inflation Surprise
Jonnelle Marte and Steve Matthews - Bloomberg
Federal Reserve officials face fresh pressure to extend rather than slow down aggressive interest-rate increases after US inflation came in hotter than forecast, potentially putting a fourth-straight 75 basis-point hike on the table.
While cheaper gasoline held US headline consumer inflation to a 0.1% advance in August from the prior month, the core measure that excludes volatile food and energy prices jumped 0.6% -- double economists' expectations, Labor Department data showed Tuesday.
/jlne.ws/3xnGtQK
Crypto Traders Hedge Against Ether (ETH) Disappointment Ahead of Merge
Muyao Shen and Vildana Hajric - Bloomberg
More crypto traders are shorting Ether in the derivatives market, as the underlying blockchain is scheduled to go through its biggest technical upgrade this week, trading data shows.
The funding rates of Bitcoin and Ether perpetual futures contracts diverged sharply over the past weekend, according to crypto data firm Kaiko. The funding rate for Ether dipped to its most negative since July 2021. Exchanges use the funding rate -- or the cost to trade -- to tether the contracts to their underlying spot price. When the rate is positive, those who hold long positions are paying interest to investors who are short, and vice visa.
/jlne.ws/3da18Rn
Hedge Fund's Decade-Long Wait for Yuan Crash Nears Payday
Ye Xie - Bloomberg
For the better part of a decade, a US hedge-fund manager who has never even set foot in China has been patiently betting that the yuan will stage a massive collapse, one so deep that its value could be cut in half.
Since 2014, Crescat Capital's Kevin Smith has been plowing as much as 10% of his $136 million macro fund into options betting against the currency. Sometimes it lost money. Sometimes it paid off, even though the major devaluation he was looking for never happened.
But Smith says now may be his moment.
/jlne.ws/3Dna6Wb
Opec says oil sell-off driven by 'erroneous signals' in markets
Tom Wilson - Financial Times
Opec has said the recent oil sell-off is the result of "erroneous signals" as the cartel pushes back against predictions that slowing economic growth and monetary policy tightening will weigh on global crude demand into 2023.
Oil market fundamentals were "unchanged", the producer group argued, yet hedge funds and other money managers had continued to close out bets on rising prices in the two major oil futures contracts "amid a market narrative of worsening economic and demand outlook".
/jlne.ws/3BBAjPe
| | | | | | Exchanges | | | Resources related to Queen Elizabeth II's state funeral
FIA
FIA has created this page for members as a resource for information related to market closures caused by Her Majesty Queen Elizabeth II's State Funeral on Monday 19 September.
The accompanying text is a non-exhaustive list of governmental and exchange announcements that may be of interest to participants in futures and derivatives markets. Nothing on this page should be taken as legal advice and members should consult their legal and other professional resources on individual needs.
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Monday, September 19, 2022 - State Funeral of Her Majesty, Queen Elizabeth II - UK Bank Holiday
CME Group
The UK Government has announced that the day of the State Funeral of Her Majesty, Queen Elizabeth II on Monday, September 19, 2022, will be a UK bank holiday. Impact On Products; Interest Rates: As a result of the ICE Benchmark Administration (IBA) announcement, the last trading day for the expiring September 2022 One-Month Eurodollar Futures (CME Chapter 453) and the expiring September 2022 Three-Month Eurodollar Futures (CME Chapter 452) and Options (CME Chapter 452A) will be Friday, September 16, 2022. Please refer to the Final Settlement rules (45303.A.) and (45203.A.) for additional details. Additionally, due to the UK bank holiday, the last trading day for expiring September 2022 MAC USD and SOFR Swap Futures will be Friday, September 16, 2022. Quarterly IMM SONIA Futures and MPC SONIA Futures will not be available for trading and clearing.
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| | | | | | Regulation & Enforcement | | | Bank of America is fined $5 million for failing to report 7.42 million options positions
Reuters
A U.S. regulator on Monday fined Bank of America Corp $5 million for failing to report over-the-counter options positions approximately 7.42 million times, making it harder to monitor markets for possible manipulative behavior. The Financial Industry Regulatory Authority said BofA Securities' failures occurred from 2009 to October 2020, and included 26 options positions that exceeded applicable size limits by 20% to 2,900%. FINRA also said the bank's supervisory system was not reasonably designed to comply with reporting obligations to the regulator's Large Options Positions Reporting platform from 2014 to October 2020. Bank of America did not admit or deny wrongdoing in agreeing to settle, and has corrected the causes underlying the reporting failures, FINRA said. The regulator also imposed a censure.
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| | | | | | Strategy | | | The Evolution of Retail Investment Activity
Cboe
Equities trading activity among retail investors has grown significantly over the past few years, much of which can be attributed to the rise in popularity of online investment forums in early-2021. The successes of social media-driven "meme" stocks including GameStop Corp. (NYSE:GME) and AMC Entertainment Holdings, Inc. (NYSE:AMC) dominated global news headlines, pushing retail trading activity to all-time highs. Cboe's Equities Execution Consulting team recently looked back at the 2020-2021 "meme" stock phenomenon in order to further analyze the development of the role that online communities played in influencing retail investment trading activity within U.S. equities markets.
/jlne.ws/3BEnzrp
| | | | | | Miscellaneous | | | Goldman Sachs Set for Hundreds of Layoffs Next Week
Nasdaq
David Solomon, the CEO of Goldman Sachs, famously moonlights as a DJ, but soon he'll be dropping pink slips, not beats.
The legendary Wall Street bank will lay off several hundred employees this month, according to sources who spoke to The New York Times, to buttress against a slowdown in deals and an uncertain economy.
/jlne.ws/3Bkoz2y
Stock Trades Reported by Nearly a Fifth of Congress Show Possible Conflicts
Kate Kelly, Adam Playford and Alicia Parlapiano - NY Times
Despite their influence and extensive access to information, members of Congress can buy and sell stocks with few restrictions.
/jlne.ws/3RX6DS8
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