| September 08, 2023 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | The Biggest Short: Trader Bets $30K On 1,100% VIX Spike By February 2024
Benzinga via Markets Insider
So far, 2023 has seen an equity bull market with low volatility, but whispers on Wall Street suggest an audacious move that could rival Michael Burry's famous "Big Short."
In a jaw-dropping play, a trader recently shelled out $30,000 on a bet that hinges on the VIX index hitting 180 by February 2024.
/jlne.ws/3PFXS0F
Short-Dated Option Trading Rises Without Shaking Up Overall Market
Rafael Abreu - MarketScale
The market for short-dated option trading, known as "zero-day options," has seen a significant rise in activity, rising in popularity since the beginning of the COVID-19 pandemic. These options allow traders to position themselves based on specific events like economic data releases or monetary policy decisions, and zero-day options for the S&P 500 now make up 43% of the total S&P 500 options volume, a considerable increase from 6% in 2017.
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Vulnerabilities in the Treasuries market aren't going away; Unease is rising - as are the extreme positions taken by hedge funds
Gillian Tett - Financial Times
Three years ago, investors learnt that the mighty US Treasuries market is not always as mighty as it seems. When the Covid-19 shock hit in March 2020, US interest rates gyrated in a way that created massive losses for hedge funds that had taken hidden, highly leveraged bets on Treasuries, via derivatives and repurchase agreements ("repos") that swap bonds for cash.
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Fed's Williams: An 'open question' whether Fed will need to hike again
Michael S. Derby - Reuters
Federal Reserve Bank of New York President John Williams on Thursday kept his options open over future U.S. interest rate policy, acknowledging falling inflation and a better balanced economy, which suggests there is no urgency for a rate rise later this month.
When it comes to the current setting of monetary policy, "it's pretty clear we're restrictive" but it's "still an open question as we go forward" whether policy must present an even greater headwind to economic activity to bring inflation back down to 2%, the Fed official said.
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China Bonds Roiled by One-Two Punch on Liquidity, Rate Outlook; Dwindling liquidity has fueled a jump in short-end bond yields; PBOC may refrain from lowering rates given yuan's weakness
Bloomberg News
China's short-end government bonds are closing in on their biggest weekly drop this year, caught in a downdraft that's swept up virtually all of the nation's assets. The yield on one-year yuan securities has jumped 13 basis points since Sept. 1, with analysts blaming the increase on dwindling liquidity and waning bets for broad-based easing. Interbank funding costs have shot up, reflecting the tightening cash conditions.
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Energy ETFs are outshining the S&P 500, but it's not just because of the oil rally
Isabel Wang - MarketWatch
As the broader U.S. stock market continues its sluggish start to September, the once struggling energy sector is again grabbing attention with exchange-traded funds that invest in energy stocks surging and pulling in outsized flows this past week after Saudi Arabia and Russia surprised the markets by curtailing oil output through the end of year, pushing crude-oil prices to their highest levels of 2023.
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| | | | | | Exchanges | | | Miami International Holdings Reports August 2023 Trading Results; MIAX Pearl Equities Hits Record 2.17% Daily Market Share with Options Volume Surging 26.5% to Record YTD Level
MIAX
Miami International Holdings, Inc. today reported August 2023 trading results for its U.S. exchange subsidiaries - MIAX , MIAX Pearl and MIAX Emerald (together, the MIAX Exchange Group), and Minneapolis Grain Exchange (MGEXâ¢). August 2023 and Year-to-Date Trading Volume Highlights. Total multi-listed monthly options volume for the MIAX Exchange Group reached 138.0 million contracts, a 27.7% increase year-over-year (YoY) and representing a monthly market share of 14.85%, a 16.1% increase YoY. Total year-to-date (YTD) volume reached a record 1.1 billion contracts, a 26.5% increase YoY.
/jlne.ws/44Ek8w0
Cboe to mull zero-dated options for Europe next year
Jeremy Chan - FN London
Cboe will weigh up whether to launch zero-dated options in Europe next year after seeing a boom in the products in the US.
Zero-dated options have spurred a double-digit increase in revenue at the Chicago-based exchange, and could be coming to its European business in the near future.
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NSE To Launch Options On WTI Crude Oil, Natural Gas Futures
BQ Prime
The National Stock Exchange on Friday announced that it will launch options linked to NYMEX WTI Crude Oil and Natural Gas futures contracts in its commodity derivatives segment.
This came after the exchange received approval from the markets regulator Securities and Exchange Board of India to launch these contracts.
The addition of options on futures contracts will further boost NSE's product offering in the overall commodity segment. These contracts are designed to provide the market participants with a more efficient way to manage their commodity risk, the exchange said in a release.
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Crypto Trading Volume Slumped to Lowest Level of the Year in August; Total monthly spot and derivatives trading volume fell 11.5%; CCData tracked trading volumes on centralized crypto exchanges
Olga Kharif - Bloomberg
Cryptocurrency trading volume declined in August to the lowest level of the year, another sign of waning investor interest since the collapse of digital asset prices from all-time highs in late 2021. The combined monthly volume of so-called spot and derivatives trading fell 11.5% to $2.09 trillion, and was the second-lowest monthly total since October 2020, according to data compiled by CCData.
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Regulators approve BME's new digital assets derivatives segment; Under the EU regulatory framework, BME Clearing can now clear Bitcoin and Ethereum futures.
Claudia Preece - The Trade News
Bolsas y Mercados Espanoles (BME) has been given approval by Spanish regulator, Comision Nacional del Mercado de Valores (CNMV), for a new digital assets derivatives segment. Under the EU regulatory framework, BME Clearing can now clear Bitcoin and Ethereum futures denominated in US dollars. According to an announcement from SIX, the new digital asset derivatives segment has been introduced in response to market demand. It will focus on "introducing digital assets to a secure and highly regulated environment, that will upgrade the trading, clearing and cash settlement of digital asset futures," said the company.
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It's Not Just BlackRock. Exchanges Like Nasdaq Are Muscling in on Crypto, Too.
Jack Denton - Barron's
BlackRock and other fund companies aren't the only stalwarts of finance muscling into cryptocurrency. Traditional exchanges see opportunities in digital assets and are taking steps to push in.
The London Stock Exchange Group (LSEG.U.K.) is "exploring plans" to build an end-to-end digital market for raising and transferring capital more efficiently, according to a spokesperson. The exchange's head of capital markets, in an interview with the Financial Times this week, said the group had been examining the potential for a blockchain-powered trading venue for about a year and reached an "inflection point" to go ahead.
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| | | | | | Regulation & Enforcement | | | CFTC Commissioner Pitches Pilot Program for U.S. Crypto Regulation
Jesse Hamilton - CoinDesk
The U.S. watchdog for derivatives markets should create a limited pilot program for regulating cryptocurrencies, said Caroline Pham, one of the members of the Commodity Futures Trading Commission (CFTC). "I'm recommending a time-limited CFTC pilot program to support the development of compliant digital asset markets and tokenization," said Caroline Pham, who holds one of the Republican seats on the five-person commission, in remarks prepared for a Cato Institute event on Thursday.
/jlne.ws/3EywX0h
CFTC Issues Orders Against Operators of Three DeFi Protocols for Offering Illegal Digital Asset Derivatives Trading
Commodity Futures Trading Commission
The Commodity Futures Trading Commission today continued its enforcement focus in the digital asset decentralized finance (DeFi) space, by issuing orders simultaneously filing and settling charges against Opyn, Inc., a Delaware-registered company based in California; ZeroEx, Inc., a Delaware company based in California; and Deridex, Inc., a Delaware company based in North Carolina.
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| | | | | | Strategy | | | Stocks Look Risky Amid Increasing Volatility. What to Doâand What to Avoid.
Steven M. Sears - Barron's
Investors are navigating a transitional time, with questions that defy easy answers. Everything seems to be happening at once, and yet nothing seems to have definitively changed.
Central Intelligence Agency Director William Burns has described our time as "one of those rare plastic moments of genuine transformation that come along once or twice a century, similar in its sweep to the moment after World War II."
/jlne.ws/489URfW
| | | | | | Miscellaneous | | | 'Dumb Money' Lampoons Wall Street Titans With a Knowing Eye; The film tells the story about the stock market frenzy over the video game retailer GameStop. It was financed and produced by the son of a Wall Street superpower.
Brooks Barnes - The New York Times
"Dumb Money" is the kind of midbudget, formula-busting, thinking-person's movie that isn't supposed to get made anymore, much less receive a wide, studio-backed release in theaters. It tells the bizarre true story of small investors - a nurse, college students, a YouTube personality known as Roaring Kitty - who created a Wall Street frenzy over the troubled video game retailer GameStop during the pandemic. Determined to teach professional investors a lesson, and hopefully get rich in the process, they pushed GameStop shares to a stratospheric level in early 2021, for a time putting the squeeze on sophisticated hedge funds that had bet that GameStop shares would fall.
/jlne.ws/3Es3k0F
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