| May 25, 2018 | | | | | Spencer Doar
Editor
John Lothian News | |
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| | | | Observations & Insight | | |
The Options Industry Leader Series 2018 - MIAX's Shelly Brown
Brought to you by the OCC
In this video from the 36th annual Options Industry Conference (OIC) in Amelia Island, Fla., Shelly Brown, MIAX executive vice president, strategic planning and operations, talks about launching MIAX Emerald, its new SPIKES volatility index, and MIAX's equity ambitions.
Watch the video here »
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Happy Friday
It is a bit of slow day for options news, it seems. As such, here's a few of the stories from the week that caught our attention (and will likely show up in this week's edition of The Spread).
->Goldman's $200m February vol windfall from MarketWatch
-> LJM - The Autopsy from RCM Alternatives
-> Leverage Alert Ringing While Cash Drains From Stock Broker Accounts from Bloomberg
->Citadel Securities ups ETF game as part of growth push from Reuters
| | | | | | Lead Stories | | | Bending the Volcker Rule; In the week ahead, the Fed's Board of Governors meets to discuss changing the Volcker Rule
Tom Hudson - Miami Herald
Paul Volcker is credited with taming runaway inflation, helping seed the U.S. economy for the booming 1980s and '90s. He is an imposing figure in finance, and that has nothing to do with his 6-feet-7 frame.
/hrld.us/2Lp5S2R
*****SD: Big fan of this image of Paul Volcker with a cigar. From the Financial Times - US banks can now expect a streamlined Volcker rule 2.0
Graphic: Markets see more Turkish lira losses and more cenbank moves to support it
Karin Strohecker, Marc Jones - Reuters
Turkey's lira is in the grip of one its worst routes of modern times but markets are sensing more weakness ahead and could push authorities to do more than this week's 3 percentage-point rate hike to turn the tide.
/reut.rs/2Ls72dQ
****SD: "The cost of hedging against big lira swings using volatility options on Friday was moving back toward the 9-year high hit on Wednesday before the central bank jacked up rates" and "one-year risk reversals ... are nearing their highest levels since Jan 2017." Financial Times on the Turkish situation here.
Investors Left 'Unprepared' by Long Bull Market
Christopher Sonzogni - Investopedia
Have years of positive returns have left investors complacent? A survey released yesterday by Boston-based Natixis Investment Managers suggests that investors are unprepared for a return to normal market conditions. Natixis' Center for Investor Insight polled 2,775 wirehouse advisors, RIAs and independent brokers globally on their practices, the challenges they face and their market expectations. Of the advisors polled, 64% believe that their clients are unprepared for a market downturn.
bit.ly/2GOJ34Z
****JB: If this is the new normal then returning to "normal" isn't normal. (I feel like there is a "Young Frankenstein" joke to be had here but I can't think of one.)
| | | | | | Exchanges and Clearing | | | Wavelength Podcast Episode 122: An Interview with Cboe's Chris Isaacson; GDPR Has Arrived
WatersTechnology
Cboe's CIO joins the podcast to discuss the exchange's tech migrations after the Bats acquisition, and Anthony and James give a primer on GDPR.
bit.ly/2LuQr9s
****SD: Timely privacy coverage AND Cboe - two birds, one stone.
NYSE's first female president brings trading nous to the job
Nicole Bullock and Philip Stafford - Financial Times (SUBSCRIPTION)
When Stacey Cunningham was an intern at the New York Stock Exchange in 1994, testosterone-filled men roamed the booths and littered the floors, while the ladies' room for exchange members was just a converted telephone box.
On Friday, Ms Cunningham is set to smash through a symbolic glass ceiling by becoming the first female leader of the NYSE.
/on.ft.com/2LwKOHx
ICE Gilt Futures Set Daily Volume Record of 1.4 Million Contracts
Business Wire
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced today that ICE Gilt futures achieved a record daily volume of 1.4 million contracts on May 24, 2018, an increase of 30% on the previous volume record of 1.1 million contracts set in August 2014. Open interest for ICE Gilt futures also continues to rise and is 945,870 contracts as at May 25, 2018.
bit.ly/2LwC44m
****SD: There are long gilt options at ICE Futures Europe, too, but pretty subdued activity according to this week's EOD reports. Average daily volume for the week thus far was less than 1,000 contracts (with no activity at all on 5/23) with open interest never topping 12,000 contracts.
Borsa Istanbul 2017 Annual Report
Borsa Istanbul
For its 2017 Annual Report, Borsa Istanbul has done an integrated report based on the
Framework of the International Integrated Reporting Council (IIRC).
bit.ly/2LwAkYH
****SD: Derivatives trading on the exchange increased 43 percent in 2017 and 6.4 percent of Borsa Istanbul's revenues came from that activity.
Bitcoin Futures Volatility and Total Volume Since the Start of 2018
Perkins Coie LLP - Lexology
According to recent data provided by CBOE and CME Group, the volatility and total volume of bitcoin futures in 2018 have been in a gradual decline. As displayed in the chart below, the Cboe bitcoin futures contract (XBT) volatility for the lead month declined in each month to begin 2018.
bit.ly/2Lv2OST
****SD: Keep in mind the recent Fed study - How Futures Trading Changed Bitcoin Prices
| | | | | | Technology | | | E*TRADE Adds More Options Trading Tools
Investopedia
E*TRADE expanded its offering of trading tools on the OptionsHouse platform, announcing a new custom grouping tool. In a press release this week, E*TRADE Financial Corporation (ETFC) said that the new tool allows traders to create their own pairing scenarios, which provides more control over options strategies. The tool also enables options traders to take the complexity out of options strategies and create new strategies by regrouping positions, un-pairing spreads or engaging in other strategies.
bit.ly/2Ltx9kB
| | | | | | Strategy | | | Bets on a Rising VIX Are Bullish for Contrarians
Helene Meisler - TheStreet
The rally that came off that big oversold reading in late April/early May lasted just over a week. And for two weeks we have been in a 20-point range on the S&P. Even when we go down we come back, but can't go very far. When we go up we come back down but can't go very far.
bit.ly/2xcW9JO
Is Coffee The Last 'Cheap' Commodity?
Seeking Alpha
Option traders know that volatility is perhaps one of the most important factors determining options prices. Extremely volatile markets tend to have expensive options. Extremely quiet markets tend to have cheap options. That's why some of the best option buying opportunities occur when traditionally volatile markets go quiet and stay that way for an abnormally-long time. Option sellers grow complacent and are willing to accept less for their obligations to buy and sell. Options get cheap on a relative basis.
bit.ly/2LvtyTl
****SD: Pfft - sure doesn't affect the big board at Starbucks.
Bearish Bets Against Global Marijuana Boom Increase to Record
Jen Skerritt - Bloomberg
The pool of bearish wagers on a pot bust in increasing.
The total value of short positions in global marijuana-related stocks has climbed to a record approaching $2.1 billion, according to Sam Pierson, an analyst at IHS Markit in Boston.
/bloom.bg/2GNDdkm
****SD: I'm not sure how financial firm Cowen can be super confident in this estimate due to all the legal murkiness surrounding the business, but it put out a note in April saying its expectations are for cannabis sales to hit $75 billion by 2030. It estimates that the current pot market is worth some $50 billion (though that number includes black market activity). At the Options Industry Conference, TMX had little flyers with the top traded equity options - marijuana businesses were up there in the most active list..
Gold catches a bid on geopolitics. Here's how experts are playing it
Keris Lahiff - CNBC
Gold prices just had their best day in more than a month as renewed tensions with North Korea pushed investors into less risky assets.
Trying times call for the safety trade, says one market watcher.
"It makes sense to hold it as a pure play because of all the geopolitical risk that's out there. It's still a calamity hedge," Mark Tepper, founder and president at Strategic Wealth Partners, told CNBC's "Trading Nation" on Thursday.
/cnb.cx/2GQ2b2y
****SD: There's a little tab to vote on if you're "moving into gold" at the bottom. The results are about 2 to 1 in favor of moving into gold based on around 400 votes. I'd be curious to see what the results would be if the survey question was located before the article on the page and not after it...
| | | | | | Miscellaneous | | | Singapore stakes claim as future Asia LNG trading hub
Joseph Green - LNG Industry
The survey of over 80 senior energy industry leaders from across the Asia Pacific region conducted at the second annual Deloitte Energy Trading Summit in Singapore this week, revealed 74% believe Singapore would attain the position by 2023. China (10%) and Japan (10%) were also identified as other potential hub locations.
bit.ly/2LvNntl
Fed could be finished hiking rates by 2019, Philadelphia's Harker says.
Jeff Cox - CNBC
Interest rate hikes could come to an end for this cycle in 2019, Philadelphia Fed President Patrick Harker said Thursday.
/cnb.cx/2Lufmd7
Why our financial decision-makers need 'skin in the game'
Paul Solman - PBS NewsHour
Economic contrarian Nassim Taleb warned of a coming financial crisis more than a decade ago. Now he believes there's a big con going on, and that the Federal Reserve's response to the 2008 crash is part of it. Economics correspondent Paul Solman catches up with Taleb to discuss his new book, "Skin in the Game" and hear his latest concerns.
/to.pbs.org/2Ls7kBo
****SD: Say what you will about Taleb, he knows how to promote.
Hedge Funds Raise Bets Against Italy, Bond Yields Soar
Laurence Fletcher - WSJ (SUBSCRIPTION)
As hedge funds scour the globe for weak spots in what have been mainly placid markets, Italy is becoming a prime target.
/on.wsj.com/2LvsIWD
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