| July 18, 2024 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | The SEC let loose with a humdinger of an opinion yesterday, one where it was hard to keep the players straight. In one corner is BOX Exchange, a national securities exchange registered with the SEC. BOX Exchange oversees BOX Market, a facility of the exchange that is privately owned by BOX Holdings. Are you with me so far? At the time of the problems, Luc Bertrand was the interim chair or chair of the board of directors of both BOX Holdings Group LLC ("BOX Holdings") and BOX Options Market ("BOX Market").
There are your players. Back in December and April of 2021, Box Exchange asked for some documents and information from BOX Holdings, BOX Market and Luc Bertrand.
According to BOX Exchange, applicants did not fully cooperate with those requests. BOX Exchange then determined that Bertrand acted, and continued to act, in a manner that was "not in the interests of the Exchange" and "in bad faith," and that he deliberately breached and continued to breach "his duty to the Exchange." As a result, on March 3, 2022, BOX Exchange ordered Bertrand to pay a $25,000 fine, and on April 15, 2022, it suspended him "from involvement with the Exchange, any facility of the Exchange and any Member of any of the [BOX] entities."
On April 21, 2022, BOX Exchange lifted the fine and suspension imposed against Bertrand.
On May 16, 2022, Applicants filed an application for review of BOX Exchange's actions pursuant to Exchange Act Rule 19d-3 and Commission Rule of Practice 420.
However, because the holding company and BOX Markets are not a member, participant, or person associated with a member of the exchange, as required for a disciplinary sanction to be reviewable under Section 19(d), the action of BOX Exchange was not reviewable by the SEC.
This is all interesting, as BOX Exchange, as the securities exchange, is the regulator. It is also 54 percent owned by TMX Group. The chair of TMX Group as of 2023 is Luc Bertrand. So he has gone from chair of the entities being regulated and personally being fined for "breaching his duty" to the exchange to being chair of the entity that owns a majority interest in the SRO/securities exchange that disciplined him and BOX Market and BOX Holdings. My guess is this matter just gets dropped. ~JJL
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Options Straddle Basics: Lex Luthringshausen Breaks Down Straddles and How to Trade Them in Part Two of His Interview With JLN's Alex Teng
JohnLothianNews.com
In this episode of options discovery, JLN's Alex Teng breaks down the options straddle. He also goes over key concepts you need to know to understand how a straddle works. In the second half of the video, Kevin "Lex" Luthringshausen from Tradier sits down for part two of an interview with JLN's Alex Teng to explain what straddles are and how to use them as an options trader.
Watch the video »
| | | | | | Lead Stories | | | VIX Stages Double-Digit Spike As Risk Off Takes Over; Chipmakers Fail To Rebound, Weight Loss Giants Eli Lilly, Novo Tumble: What's Driving Markets Thursday?
Benzinga via Business Insider
It's another risk-off day on Wall Street, with all major U.S. indices trading in the red. The CBOE Volatility Index (VIX), often referred to as the market's fear gauge, spiked over 10%, reaching levels last seen in late April.
Both the S&P 500 and the Nasdaq 100 indices declined by 0.6%, while the Dow Jones Industrial Average fell 0.7%, potentially ending a streak of six consecutive positive sessions.
/jlne.ws/3YaU1NI
Franklin Templeton steps back into FX options; Former biggest user of the instrument among US mutual funds returns with $7.6bn of USD/JPY strategies
Ben St. Clair and Joe Parsons - Risk.net
In mid-2020, US asset manager Franklin Templeton was by far the largest user of foreign exchange options among US mutual funds, with over $50 billion notional on its books - more than four times higher than its nearest peer. After that high point, the firm slowly ran down its positions to zero by the end of 2022.
/jlne.ws/469MPTY
The young investors gambling on Indian stocks; Millions of India's citizens have piled into shares and options, egged on by online 'finfluencers', but regulators are sounding the alarm
Chris Kay and Benjamin Parkin - Financial Times
"How many of you want to be rich?" Hundreds of hands shoot up at a packed conference hall in the southern Indian city of Bengaluru. The attendees are responding to Chandan Taparia, head of derivatives research at financial group Motilal Oswal. Roaming the stage as an array of technical charts pop up on screen, Taparia shares his market trading tricks to the fixated assembly of largely young Indian men hanging on his every word and intently jotting down strategies on a recent Sunday. "Friends, if you follow this, trust me, you won't lose," Taparia notes in an aside. "If you don't take risks, you cannot survive in the market, you cannot achieve your goal," he adds. "If you win, you can rule the world."
/jlne.ws/3Y5Dcn5
Hedge funds that try to avoid pain just saw their worst day in nearly two years
Steve Goldstein - MarketWatch
The main selling point of hedge funds to the wealthy investors they cater to is that they are managed in such a way that they can thrive even when the broader market is struggling.
That wasn't the case on Wednesday.
/jlne.ws/4fab2gT
Wall Street falls as anxiety rises, earnings heat up
Stephen Culp - Reuters
U.S. stocks turned lower on Thursday, reversing early gains as investors continued to rotate away from high-priced megacap growth stocks and second-quarter earnings season gathered steam.
All three major U.S. stock indexes were weaker in choppy trading, with the blue-chip Dow on course to snap its series of consecutive record closing highs.
/jlne.ws/3W2pNtu
| | | | | | Exchanges | | | Eurex expands crypto derivatives suite with the launch of Ether futures and options; Development builds upon the launch of FTSE Bitcoin index futures and options last year, with the new Ether offering listed in EUR and USD.
Wesley Bray - The Trade
Eurex is set to expand its crypto derivatives portfolio with the launch of FTSE Ethereum index futures and options on 12 August. The move builds upon the launch of FTSE Bitcoin index futures and options last year, falling in line with Eurex's goal to offer secure access to cryptocurrencies in a regulated market environment.
/jlne.ws/3y2BBnw
| | | | | | Regulation & Enforcement | | | FIA releases best practices for automated trading risk controls and system safeguards
FIA
FIA, a leader for over 14 years in the development of best practices for mitigating the risks of electronic trading, has released its latest paper - Best Practices for Automated Trading Risk Controls and System Safeguards.
This paper consolidates our previous work and covers best practices in pre-trade risk management, exchange volatility control mechanisms, post-trade analysis and exchange-based conformance testing, among other areas. These practices are designed to help ensure that markets operate safely, regardless of the technology used. The tools developed through the collaboration of market participants and exchanges to manage the risks related to automated trading have proven highly effective in limiting market disruptions and protecting markets.
/jlne.ws/3WbESsJ
| | | | | | Technology | | | SpectrAxe and OSTTRA partner to streamline FX options trading; The offering works from price discovery through to execution, booking, and risk management within the FX options market - combining SpectrAxe's price discovery and execution CLOB with OSTTRA's post-trade network.
Claudia Preece - The Trade
SpectrAxe and OSTTRA have partnered on an end-to-end service aimed at streamlining FX options trading through automation of the entire process. Specifically, the offering works from price discovery through to execution, booking, and risk management within the FX options market - combining SpectrAxe's price discovery and execution CLOB with OSTTRA's post-trade network.
/jlne.ws/3WpmEFw
| | | | | | Strategy | | | Option Strategies for 2024 Elections
Cboe
2024 is a transitional year for political cycles in many countries and regions, with elections taking place across Europe, the US and India. The first week of July started with landmark elections in two major economies, the UK and France. The UK election resulted in a widely expected landslide victory for Kier Starmer's Labour party. In France, on the other hand, the second-round election for the National Assembly resulted in a surprising turn from the first round, delivering what looks like a hung parliament, with the left-wing alliance Nouveau Front Populaire (NFP) winning 182 of the 577 seats, followed by Macron's centrist coalition winning 168 seats.
Markets seemed to react more favorably to the French election results, with the Cboe France 40 Index rising over 1% in its first two hours of trading on Monday 8 July, the morning after the French election, likely reflecting relief that no single party secured a majority as was widely expected. By contrast, the Cboe UK 100 Index traded roughly flat through the UK election, likely because the results of the UK election were much closer to expectations.
/jlne.ws/3zPoFSD
Tackling High-Volatility Sectors Together
tastytrade
Tune in for three options trade ideas today on Options Trading Concepts Live!
Mike buys a call diagonal spread in Microsoft ahead of earnings.
Nick sells a strangle in Shopify to take advantage of high implied volatility and elevated options prices.
Katie buys a call spread in Natural Gas futures to play for a price extreme reversion.
Tune in for a full options trading Q&A session as well from the YouTube chat!
/jlne.ws/4bMIZ4d
S&P 500
Cboe (Video)
Yesterday, options trading volume was ~25% above recent ADV, the Russell 2000 Index reached its 52-week high, #SPX traded ~3.5M contracts -- all this and more in #Vol411 with Scott Bauer.
/jlne.ws/46918ba
| | | | | | Miscellaneous | | | Ken Griffin buys 150mn-year-old stegosaurus for $44.6mn; Citadel founder purchases nearly complete specimen at Sotheby's auction
Zehra Munir and Brooke Masters - Financial Times
Ken Griffin, the Citadel hedge fund founder, has paid $44.6mn for a 150mn-year-old stegosaurus known as "Apex", making it the most valuable fossil ever sold at auction. The fossil - which is 11ft tall and 27ft long - surpassed its presale low estimate by more than 11 times, according to Sotheby's, the New York auction house, on Wednesday. While the bidder was officially anonymous, a person familiar with Griffin's plans confirmed the purchase and said he intended to put it on display at a US museum. "Apex was born in America and is going to stay in America," Griffin told the auction house, which it cited in a press release about the sale.
/jlne.ws/4cLlav2
***** Here is The Wall Street Journal's version of this story.~JJL
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