| August 24, 2023 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | US stocks may not be ready for hawkish Powell at Jackson Hole, options data show
Saqib Iqbal Ahmed - Reuters
Investors may be underestimating the degree of potential market turbulence stemming from the Federal Reserve's economic symposium at Jackson Hole, Wyoming, potentially leaving them more vulnerable to a hawkish surprise, options strategists said. Pricing in the options market - where investors often hedge against stock swings - shows expectations of a 0.9% move in the S&P 500 Index (.SPX) between now and the end of trading Friday, the day Fed Chair Jerome Powell is expected to give his address on monetary policy at 10:05 a.m. ET (1405 GMT).
/jlne.ws/3qE1F4S
Retail Traders Make Up 30%-40% of Zero-Day Options (0DTE) Volume, Cboe Says
Lu Wang - Bloomberg
Day traders are far more active in the booming world of zero-day stock options than Wall Street realizes, according to the exchange at the center of the frenzy.
Retail investors likely make up at least 30% of the volume in contracts tied to the S&P 500 that expire within 24 hours â and possibly up to 40% â according to Jonathan Zaionz, senior derivatives analyst at Cboe Global Markets. That's much higher than estimates around 5% given by academics and researchers at firms like JPMorgan Chase & Co.
/jlne.ws/3sque6a
Bank of America Disputes Goldman Logic on Zero-Day Option Threat to Stocks; Booming investing tool spurs fresh handwringing on Wall Street; Latest debate centers around last week's flurry in put trading
Lu Wang - Bloomberg
The heated debate on the threat posed by the boom in stock derivatives that expire within 24 hours is pitting two of Wall Street's biggest banks against each other. After Goldman Sachs Group Inc. blamed the rise of zero-day options for the late-afternoon S&P 500 selloff seen on Aug. 15, Bank of America Corp. dubs the logic "largely misguided." At the center of the disagreement: The precise role played by put derivatives that protect against equity losses with a strike price at 4,440, a level close to where the market was trading at that time.
/jlne.ws/3QT7WEm
****** If investors want to sell, they will find a way. They always have. This blame the derivative baloney is old, stale and misguided.~JJL
Watch Cboe CEO on Surge in VIX Options Trading, New Products
Bloomberg (Video)
"Retail investors have an incredibly bullish sentiment," Cboe Global Markets CEO Ed Tilly says while discussing the surge in VIX options trading and the other products the Cboe is planning to launch with Sonali Basak and Scarlet Fu on "Bloomberg Markets: The Close."
/jlne.ws/44n7BN9
Were Options Traders Right About Nvidia?
Gunjan Banerji - WSJ
Options traders were betting on a big swing in Nvidia shares after its earnings Wednesday. Their wagers are looking prescient.
Prices in the options market indicated a roughly 11% swing in the shares through Friday. Nvidia shares are already up around 10% at $518.50 in afterhours trading.
/jlne.ws/3EuHFVH
| | | | | | Exchanges | | | Cboe CEO Says Firm Can Go After Deals in Open Jurisdictions
Katherine Doherty - Bloomberg
Exchange operator Cboe Global Markets Inc. can do future acquisitions and expand its global presence due to its "flexible balance sheet," according to Chief Executive Officer Edward Tilly. "There is nothing we have to do. We like to be in jurisdictions that are open to competition, and we like to be there in scale," Tilly said in an interview with Bloomberg Television Wednesday. "That's really where our acquisitions have been in the past."
/jlne.ws/3P9qZcf
****** I need to have some "Tilly Shark" t-shirts made up. The man is now a shark.~JJL
Micro E-mini S&P 500 Futures Surpass 1 Billion Contracts Traded
CME Group
CME Group, the world's leading derivatives marketplace, today announced that Micro E-mini S&P 500 futures surpassed 1 billion contracts traded on August 23.
/jlne.ws/3KUrRiz
| | | | | | Regulation & Enforcement | | | Goldman, JPMorgan, Morgan Stanley, UBS Settle Stock-Lending Suit
Chris Dolmetsch and Bob Van Voris - Bloomberg
Goldman Sachs Group Inc., Morgan Stanley, JPMorgan Chase & Co. and UBS AG agreed to pay nearly $500 million to settle an antitrust class action by US pension funds over the banks' control of the market for stock loans used for hedging and short selling.
/jlne.ws/47HPjcp
US SEC overhauls rules for $20 trillion private fund industry
Carolina Mandl and Chris Prentice - Reuters
The U.S. securities regulator on Wednesday adopted new rules that will shine a light on private equity and hedge fund expenses and fees, in what executives and lawyers said marks a sweeping overhaul for an industry long criticized for its opacity. But in a partial victory for fund groups which opposed the rules, the Securities and Exchange Commission did not proceed with proposals that would have expanded funds' legal liability and outright banned arrangements that allow some investors special terms.
/jlne.ws/3QTfLtR
IOSCO, CPMI report examines central counterparty risks; Policymakers seek to ensure CCP readiness to handle loss events
James Langton - Investment Executive
In the wake of the global financial crisis, policymakers pushed for greater use of central counterparties (CCPs) in the global derivatives markets. Now, they're calling on CCPs to ensure that they have adequate resources to deal with risks such as investment losses and cyberattacks. In a joint report, the International Organization of Securities Commissions (IOSCO) and the Bank for International Settlements' Committee on Payments and Market Infrastructures (CPMI) stressed the need for CCPs to ensure they can handle losses triggered by events other than trading-firm defaults.
/jlne.ws/47Oqvzt
| | | | | | Strategy | | | VIX Volumes Moving At Record Pace
Cboe
In #Vol411, Scott Bauer @cboesib lets us know that the $VIX September 40-Strike call was very active yesterday, with 44k contracts traded, #VIX #options volume is moving at a record pace so far this year, with average daily volume around 740k and more.
/jlne.ws/45tYHz6
| | | | | | Miscellaneous | | | Goldman Sachs Managers Push Return to Office Under CEO David Solomon
Kylie Kirschner - Business Insider
Goldman Sachs CEO David Solomon has long been vocal about his dislike for the remote work that became widespread during the pandemic. Most Goldman employees in revenue-producing roles have already returned to the office full time, Bloomberg reported, but employees in other roles have reportedly been more resistant, displeasing senior management.
/jlne.ws/3KRKp2M
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