| | | | | | | April 14, 2025 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
|
| | | | Lead Stories | | | Zero-day options are fueling the unprecedented volatility on Wall Street amid tariff chaos
Yun Li - CNBC
Wild intraday gyrations in stocks since "liberation day" have put investors more on edge than ever, and the popularity of zero-day-to-expiration options is partly to blame.
Zero-day-to-expiration options are contracts that expire the same day that they're traded. The trading volume of 0DTE options tied to the S&P 500 surged to 8.5 million in April, a 23% jump since the beginning of the year and accounting for roughly 7% of the total volume in U.S. option markets, according to data from JPMorgan.
/jlne.ws/3E6F7Aw
Bullish trade in Apple options reaps gains as shares jump on tariff exemption
Saqib Iqbal Ahmed - Reuters
An unidentified options trader's multi-million dollar bet on a short-term rebound in Apple Inc.'s shares was set to reap a sizable profit as the iPhone-maker's shares soared on Monday following the Trump administration's weekend move to grant tariff exclusions for smartphones.
On Monday, Apple shares rose as much as 7% to a high of $212.94 before paring gains to trade up 4.5% at $206.05, after the Trump administration, late on Friday, granted exclusions from the steep reciprocal tariffs on smartphones and a set of other electronics products, a move seen as a big break for technology firms such as Apple that rely on imports from China.
/jlne.ws/42lLXda
Cboe Begins Trading in S&P 500 Equal Weight Index Options on April 14, 2025
Cboe
Cboe Global Markets, Inc. (Cboe: CBOE), the world's leading derivatives and securities exchange network, today announced it has launched for trading S&P 500 Equal Weight Index (EWI) options. The new options are the latest addition to Cboe's S&P 500 toolkit and provide investors additional choice and diversification opportunity through broad-based U.S. equity market exposure. The S&P 500 EWI (Bloomberg index ticker: SPW) is the equal-weight version of the S&P 500 Index, with each constituent of the S&P 500 EWI allocated a fixed weight of 0.2% of the index total at each quarterly rebalance. While including the same constituents, the S&P 500 EWI and the capitalization-weighted S&P 500 Index often differ in sector and factor exposures including smaller-cap vs. mega-cap stocks, momentum bias, and realized volatility.
/jlne.ws/3GkvcYu
SPX Intraday Volatility Highest Since 2008 on Tariff U-Turn
Mandy Xu - Cboe
While equity and credit vulatilities fell last week on Trump's tariff U-turn, FX, guld, oil, and interest rate vulatilities all increased. Notably, both US Treasuries and US Dullar suld off, with VIXTLT jumping over 60 pts to a high of 190. TLT skew, which had been inverted since Feb as growth concerns weighed on yields, steepened significantly last week with puts now trading at a premium to calls (i.e. positioning for yields to go even higher).
/jlne.ws/3XVtoeH
Goldman's Stock Traders Ride Volatility to Record Quarter
Todd Gillespie - Bloomberg
Goldman Sachs Group Inc.'s stock traders posted their highest quarterly revenue haul on record, riding a wave of volatility triggered by an emerging global trade war that's roiled financial markets.
Equity-trading revenue rose 27% from a year earlier to $4.19 billion for the first three months of the year, according to a statement Monday.
/jlne.ws/42ADuDn
Exclusive-China has considered opening its $520 billion ETF market to Western market makers, sources say
Selena Li - Reuters
China has been looking at allowing Western firms such as Citadel Securities and Jane Street to act as market makers in its rapidly growing exchange-traded fund (ETF) sector, two people with direct knowledge of the matter said. Over the last two years, Chinese authorities have issued more licences and encouraged the development of domestic market makers. But international market makers are more experienced in providing liquidity to ETFs and the move would boost trading efficiency and lower costs, the people said, declining to be identified due to the sensitivity of the matter.
/jlne.ws/42FHNhG
China's Stock Rescue in Full Swing as ETF Inflows Hit Record
Bloomberg News
Chinese exchange-traded funds received record inflows as state-backed buyers pulled out all the stops to shield the market against Donald Trump's tariff onslaught. Equity ETFs listed onshore saw nearly $24 billion in net inflows last week, eclipsing a prior record of around $23 billion set in October, data compiled by Bloomberg show. The bulk of the purchases went into ETFs known to be favored by China's so-called national team.
/jlne.ws/3G33Gi7
Global Funds Tout India Markets as Haven in Trump's Tariff Chaos
Abhishek Vishnoi and Ashutosh Joshi - Bloomberg
As the US-China trade war ramps up in the wake of Donald Trump's tariff shock, global investors are refocusing on Indian assets as a relative safe haven. An MSCI Inc. gauge of India's stocks has dipped less than 3% since the April 2 tariff barrage, about half the decline in a measure of Asian peers. India's bonds have also bucked a global selloff, as the central bank moves to an easier stance to provide liquidity for banks.
/jlne.ws/4jBT3Bz
***** John Lothian News is preparing to offer a three-year marketing campaign, Trade India, aimed at attracting FCMs, asset managers, hedge funds and individual traders to trade India's cascade of futures markets open to non-domestic traders. If you are interested in learning more, contact me at johnlothian@johnlothian.com
The Simple Explanation for This Week's Treasury Market Mayhem; While leveraged trades blowing up may have played a small role, traders' search for a boogeyman ignores the obvious
Jon Sindreu - The Wall Street Journal
The Treasury market freaked everyone out this week when yields on longer-term debt shot higher even as stocks were being bludgeoned and the dollar fell. Naturally, traders are wondering why. The immediate suspects include somewhat plausible ideas revolving around complex trading strategies employed by hedge funds to conspiracy theories focused on nefarious dealings by foreign governments. But the answer might be far simpler: U.S. government debt is doing badly because, well, investors don't want to buy it.
/jlne.ws/42FYkCf
Treasurys Could Calm Down if Unwinding of Basis Trades Was Main Trigger
The Wall Street Journal
If unwinding of 'basis trades' was indeed the most important factor behind last week's U.S. Treasury selloff, then price action should calm down as positions are exited and a new equilibrium is found, TwentyFour Asset Management's Felipe Villarroel says. "Stakes are high though," the partner in portfolio management says in a note. These trades occur on balance sheets of unregulated entities such as hedge funds, so there is little clarity as to when these positions will stop causing trouble, he says.
/jlne.ws/3RMvObV
Leveraged ETF Traders Endure Volatile Ride After Chip Bet
Vildana Hajric - Bloomberg
The sense of vindication didn't last long.
After sinking nearly $2 billion into a triple-levered semiconductor fund last week, retail investors are enduring a volatile ride as the Nasdaq 100 swings between gains and losses.
The fund, known as SOXL, rose as much as 9% Monday on news that President Donald Trump's administration exempted smartphones, computers and other electronics from its so-called reciprocal tariffs. It then fell amid a broad retreat in risk assets, only to go up again.
/jlne.ws/3EgqlHn
Dollar Fears Grow as Traders Increase Hedges to Five-Year High
Masaki Kondo - Bloomberg
Demand for hedging against potential dollar declines has jumped to a five-year high as the Trump administration's tariff policy threatens to sap US economic exceptionalism and undermine the greenback.
An index measuring three-month risk reversals - or the spread between call and put options - on the dollar against 12 of its major peers has dropped to the lowest level since the depth of the global pandemic in March 2020, according to data compiled by Bloomberg.
/jlne.ws/42uUGKl
| | | | | | Exchanges | | | S&P Global and CME Group to sell OSTTRA to KKR for $3.1 billion
CME Group
S&P Global and CME Group today announced the signing of a definitive agreement to sell OSTTRA, a leading provider of post-trade solutions for the global OTC market, to investment funds managed by KKR, a leading global investment firm. The terms of the deal for OSTTRA equaled total enterprise value at $3.1 billion, subject to customary purchase price adjustments, which will be divided evenly between S&P Global and CME Group pursuant to their 50/50 joint venture.
/jlne.ws/44op2AF
| | | | | | Regulation & Enforcement | | | The SEC Is Considering Blunting Its Trade-Tracking System
Bill Alpert - Barron's
In the past year, fraud investigations at the U.S. Securities and Exchange Commission started to benefit from a trade-tracking system that took 15 years and cost $1 billion to build.
The SEC's new bosses are considering killing or impairing the system, calling it an unwarranted invasion of investors' privacy and too costly to operate.
/jlne.ws/42JJKcX
SEC Green Lights Options Trading on Ethereum ETFs
Mallika Mitra - Yahoo Finance
On Wednesday, the Securities and Exchange Commission approved filings for options trading on several spot Ethereum ETFs. The green lighting of the requests was "100% expected," according to James Seyffart, ETF research analyst at Bloomberg Intelligence. The approvals included the Nasdaq ISE's request to list option contracts on BlackRock's iShares Ethereum Trust (ETHA) just a day after the asset manager tapped an additional digital asset custodian for the fund.
/jlne.ws/4j44wKd
Why traders - and Trump - should thank the SEC
Financial Times
/jlne.ws/3EpOlYz
| | | | | | Strategy | | | A bearish 'death cross' just flashed in the S&P 500 and Nasdaq
Matthew Fox - Business Insider
The S&P 500 and Nasdaq 100 both flashed the dreaded "death cross" formation on Monday.
The technical sell signal occurs when an index's 200-day moving average rises above its 50-day moving average. It can signal a reversal in a prior trend - in this case, the two-year bull market in stocks.
The development comes on the heels heightened volatility in recent days, which saw the S&P 500 fall 11% in just two days and flirt with bear-market territory before posting a historic 10% single-day gain the following week.
/jlne.ws/4cxd5KX
S&P 500's looming 'death cross' may not be as ominous as it sounds, analysts say
Saqib Iqbal Ahmed and Terence Gabriel - Reuters
A tariff-induced selloff in the U.S. stock market faces another worry, the "death cross" pattern, but history shows the ominous sounding technical signal may not necessarily mean equities face more significant downside.
A death cross occurs when the 50-day moving average (DMA), seen by technicians as a proxy for the intermediate-term trend, slips below the 200-DMA, a proxy for the long-term trend. Technical analysts view the occurrence as marking a spot where a shorter-term correction could turn into a longer-term downtrend.
/jlne.ws/3G6LeVX
| | | | |  | | | | 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
| | |
|
|
| |
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.
© 2025 John J. Lothian & Company, Inc. All Rights Reserved. |
|
|
