| August 08, 2024 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
|
| | | | Observations & Insight | | | Today's top story is "Wall Street Engineers Unveil Complex New Options Trade" and has a subheadline "Cboe to Launch Options on VIX Futures Amid Surging Derivatives Demand." We mentioned this yesterday in Hits and Takes. The story says Cboe Global Markets Inc. plans to launch a new options product tied to futures for the Cboe Volatility Index (VIX) on October 14, pending regulatory approval. This product allows the trading of options on VIX futures, aiming to provide new ways for investors to hedge market volatility. Unlike the existing cash-settled VIX options, these will be physically settled and traded in futures accounts, thus accessible to more investors. This move is part of Cboe's response to increasing demand for innovative derivatives. However, according to Bloomberg, some experts believe the complexity of the new product may limit its appeal. ~JJL
++++
 Unrealized Insurance: The Futures Industry's Missed Opportunity for FDIC-Like Protection in 1973 JohnLothianNews.com How the Original CFTC Proposal's Plan for Insured Customer Accounts Was Replaced by Self-Regulation and Led to the Creation of the National Futures Association. Ream more »
| | | | | | Lead Stories | | | Wall Street Engineers Invent a New Head-Spinning Options Trade; Cboe says it plans to launch options on VIX futures in October; Product is latest bid to tap surging demand for derivatives
Lu Wang and Sam Potter - Bloomberg
Financial wizards have conjured up possibly their most dizzying product yet in the quest to ride the derivatives boom: Cboe Global Markets Inc. is poised to offer options on futures for an index based on options on another index. The Chicago-based firm plans to issue options tied to futures for the Cboe Volatility Index, the famous "fear gauge" otherwise known as the VIX. That gauge is itself built using options that track the S&P 500. The new contracts - scheduled to list on Oct. 14, pending regulatory review - are the latest in a flurry of products unleashed by Cboe amid a record surge in trading volumes across the derivatives complex.
/jlne.ws/4dzaT57
Bond Trader Seeks Huge Options Payout on German Recession Wager; Profit of EUR75 million seen if German 10-year yield falls to 2%; Speculation increased about recession after weak US jobs data
James Hirai - Bloomberg
Investors are placing large bets on German bonds, with at least one seeking a huge payout in the event yields fall at a pace typically seen when the economy is in a recession. An investor has purchased 50,000 options contracts tied to 10-year bond futures since Wednesday, according to two London-based traders, targeting a EUR75 million ($82 million) profit from an outlay of just under EUR14 million. Hitting the jackpot will require the benchmark yield to fall to 2% or lower within six weeks from the current level around 2.25%. The period covers next month's European Central Bank and Federal Reserve monetary-policy decisions.
/jlne.ws/3LVcSVF
Traders lose billions on big volatility short after stocks rout
Nell Mackenzie - Reuters
A wager that stock markets would stay calm has cost retail traders, hedge funds and pension funds billions after a selloff in global stocks, highlighting the risks of piling into a popular bet.
The CBOE VIX index, which tracks the stock market's expectation of volatility based on S&P 500 index options, posted its largest-ever intraday jump and closed at its highest since October 2020 on Monday as U.S. recession fears and a sharp position unwind have wiped off $6 trillion from global stocks in three weeks.
/jlne.ws/3SGxd4W
Funds offering protection from volatility fail to deliver in sell-off; 'Covered call' ETFs were supposed to be a goldilocks investment but are not immune from sharp downturns
Nicholas Megaw and Will Schmitt - Financial Times
Investors who pumped tens of billions of dollars into funds offering insulation from volatility suffered sharp losses during this week's stock sell-off, highlighting the perils for retail traders seeking easy ways to ride out market uncertainty.
"Covered call" ETFs have boomed in popularity in recent years, with assets under management growing from about $18bn in early 2022 to roughly $80bn as of July, according to Morningstar data. Covered call strategies involve buying a basket of stocks while selling income-generating derivatives tied to the underlying assets.
/jlne.ws/4ddWAmN
The VIX Was Cruising at 65. Now Let's Send in the Reality Police; Here's what makes me nervous about how investors are interpreting the big move on Monday.
Peter Tchir - TheStreet
What does it really mean for the Volatility Index to hit 65 on Monday? You might be surprised.
The official VIX calculation clocked in at 65.73 on Monday at 8:34 a.m. ET. That level is now used by many people to justify long positions in equities. The theory seems to be that we had an "epic" spike in volatility indicating panic, and that panic has since receded - hence creating a buying opportunity. Notice, that we chose to use the word volatility here, partly because many seem to use VIX and volatility interchangeably - which is not accurate.
/jlne.ws/3YynnFX
Cboe to launch options on Cboe Volatility Index futures; New options-on-future structure has been developed to provide a new way to manage market volatility.
Wesley Bray - The Trade
Cboe Global Markets is set to launch options on Cboe Volatility Index (VIX) futures, with an expected date to commence trading on 14 October, subject to regulatory review. Cboe currently offers securities-based VIX Index options, allowing investors to manage or gain exposure to broad US equity market volatility. The new options on VIX futures will offer a similar utility but will be based on front-month VIX futures.
/jlne.ws/4dzDuXR
ETFs smash previous record for monthly flows in July; Buying frenzy highlights exuberance that gripped markets before this week's sharp sell-off
Steve Johnson and Will Schmitt - Financial Times
Investors poured record sums into exchange traded funds in July, highlighting the exuberance that gripped global financial markets before this week's sharp sell-off.
Net inflows into ETFs globally hit $195bn in July, according to figures from BlackRock, totally eclipsing the monthly record of $169bn in December 2023. About $124bn of that flowed into US-listed ETFs, the second-highest amount on record behind December's $129bn.
/jlne.ws/3Ah9hhZ
Balyasny Goes on New Hiring Spree With $200 Million in Payouts; Point72's Peter Goodwin, Citadel's Alberto Mann among recruits; Millennium, Citadel also tapping into a limited pool of talent
Nishant Kumar, Katherine Burton, and Gillian Tan - Bloomberg
Dmitry Balyasny is on an expensive hiring spree to fix his hedge fund's equities trading business. The billionaire's Balyasny Asset Management is spending more than $200 million in payouts to recruit senior money managers who previously worked for rivals such as Ken Griffin, Steve Cohen and Izzy Englander, according to people with knowledge of the matter.
/jlne.ws/3WAkJwJ
| | | | | | Exchanges | | | Why Robinhood is departing from its roots - with a big bet on advanced traders; From a new desktop platform to futures trading, Robinhood has hinted at upcoming features geared toward advanced traders
Gordon Gottsegen - MarketWatch
The investing app that would shoot confetti when someone purchased a stock is looking to mature.
Online brokerage Robinhood Markets Inc. reported its Q2 earnings Wednesday evening, reporting $682 million in quarterly revenue and $188 million in net income to beat analyst expectations. That was a significant bump compared to the previous year, when the company reported $486 million in revenue and a net income of $25 million in the second quarter.
/jlne.ws/4dxL5Gw
NYSE American Seeks SEC Nod for Options Tradings on Three Ethereum ETFs
Bhushan Akolkar - Coinspeaker
On Wednesday, August 7, the New York Stock Exchange (NYSE) American LLC proposed a rule change allowing them to list and trade options for three Ethereum exchange-traded-funds (ETFs) operated by asset managers Bitwise and Grayscale.
In the filing, the NYSE American requested the SEC to permit options trading for the Grayscale Ethereum Trust (ETHE), the Grayscale Ethereum Mini (ETH), as well as the Bitwise Ethereum ETF (ETHW).
/jlne.ws/3LVA71R
CME Group Declares Quarterly Dividend
CME Group
CME Group Inc., the world's leading derivatives marketplace, today declared a third-quarter dividend of $1.15 per share. The dividend is payable September 25, 2024, to shareholders of record as of September 9, 2024.
/jlne.ws/3SHregd
Robinhood Posts Earnings Beat. The Stock Is Up.
Andrew Welsch - Barron's
Robinhood Markets reported strong second-quarter earnings Wednesday thanks to a surge in revenue from cryptocurrency and options trading revenue.
/jlne.ws/4chxtOK
SGX Group reports market statistics for July 2024
SGX
Singapore Exchange (SGX Group) today released its market statistics for July 2024. Activity in SGX Group's marketplaces increased across asset classes as global investors managed portfolio risks in response to manifold economic and political developments during a volatile month. Derivatives traded volume gained 15% year-on-year (y-o-y) to 23.5 million contracts.
/jlne.ws/4dgiVjs
SGX Group reports FY2024 net profit of S$525.9 million
SGX
Singapore Exchange (SGX Group) today reported FY2024 adjusted net profit of S$525.9 million, 4.5% higher from the previous year (S$503.2 million). Adjusted EBITDA was up at S$711.6 million (S$688.6 million), while adjusted earnings per share was 49.2 cents (47.1 cents). Revenue increased 3.1% to S$1,231.7 million (S$1,194.4 million), mainly driven by higher revenues from Currencies and Commodities and Platform and Others, partially offset by lower Equities - Cash and Equities - Derivatives revenue.
/jlne.ws/3YxZKNL
The Tel-Aviv Stock Exchange Reports the Results of the Financial Statements for the Second Quarter and the First Half of 2024
The Tel Aviv Stock Exchange Ltd.
TASE records adjusted profit of close to NIS 26 million in the second quarter, compared to NIS 20 million last year; Revenue in the second quarter of 2024 totals NIS 105.1 million, a 13% increase compared to NIS 92.9 million in the corresponding quarter last year; Adjusted EBITDA in the second quarter of 2024 totaled NIS 45.8 million, compared to NIS 35.6 million in the corresponding quarter last year, an increase of 29%; Adjusted net profit in the second quarter of 2024 totaled NIS 25.7 million, compared to NIS 20.4 million in the corresponding quarter last year, an increase of 26%
/jlne.ws/4dglP7Q
| | | | | | Strategy | | | These Stocks Held Up During the Selloff. What That Reveals About the Market.
Teresa Rivas - Barron's
August is the cruelest month. While growth stocks-and especially tech names-were in the spotlight during the month's brutal selloff, there was plenty of pain to go around. Yet there were some bright spots that show fundamentals still matter.
/jlne.ws/3AhnhIz
Active Options
Cboe (Video)
Scott Bauer gives market updates in #Vol411, taking a look at backwardation in the #VIX futures curve and more.
/jlne.ws/3ylomPb
| | | | | | Miscellaneous | | | Bonita Leung Shares Her Passion with the Love 21 Foundation
Cboe
Cboe believes in supporting our associates who volunteer their time, energy and expertise to improve their communities and the lives of others. Each year, associates can nominate their peers-those who go above and beyond and exemplify the principle of Good Citizenship-for the Cboe Global Markets Award for Outstanding Community Service. Bonita Leung is a 2023 Outstanding Community Service Award recipient for her work with the Love 21 Foundation, a Hong Kong-based charity empowering the Down syndrome and autistic community through sport, nutrition and holistic support programs.
/jlne.ws/4fFs1Iq
| | | | |  | | | | JLN Options is sponsored by: | | | | | |  |  |  |  |  | | | | | |  |  | | |
|
|
| | | |
| | | | John Lothian News (JLN) is the news division of John J. Lothian & Company, Inc. (JJLCO). The online media and financial services firm is staffed by derivatives industry, journalism and technology professionals. | | | | | | | John Lothian News Editorial Staff: | | | John Lothian
Publisher | | | Sarah Rudolph
Editor-in-Chief
| | | Jeff Bergstrom
Editor
| | | Asma Awass
Intern |
|
|
| |
Disclaimer: All John Lothian Newsletters, JohnLothianNews.com, MarketsWiki.com and MarketsReformWiki.com are products of John Lothian News, a division of John J. Lothian & Company, Inc. The opinions expressed in all John J. Lothian & Company, Inc. publications are strictly those of their respective editors. They are intended solely for informative purposes and are not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Information is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Security futures are not suitable for all customers. Futures and options trading involve risk. Past results are no indication of future performance. Nothing on any John J. Lothian & Company site should be considered an endorsement by any sponsor of any website or newsletter content.
© 2023 John J. Lothian & Company, Inc. All Rights Reserved. |
|
|
