$4 Trillion Triple Witching Options Event, Rebalancing to Threaten Market Calm

Sep 15, 2023

Observations & Insight

Options Discovery Episode 20: Intro to Options and Earnings; eToro Equity and Derivatives Investment Analyst Callie Cox Breaks Down Options and Earnings With JLN’s Alex Teng
JohnLothianNews.com

In this episode of Options Discovery, Asma Awass introduces equity option price behavior around earnings announcements. Alex Teng dives deeper into this topic with Callie Cox, a seasoned investment analyst and content creator from the “social-based” brokerage firm eToro. Callie discusses her background in options, indicators to look at when close to earnings announcements, how implied volatility comes into play, hedging with options before an earnings announcement, and more. You can learn more about eToro here: https://www.etoro.com/en-us/

Watch the video »

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Options And Earnings: Callie Cox, Investment Analyst At eToro, Explains These Concepts And More In This Options Discovery Interview
JohnLothianNews.com

In this Options Discovery full interview, Alex Teng sits down with Callie Cox, equity and derivatives analyst at eToro, for this week’s full interview. Callie breaks down indicators to look at when close to earnings announcements, how implied volatility comes into play, hedging with options before an earnings announcement, and more. Callie also discusses eToro, a “social-based” brokerage firm. You can learn more about eToro here: https://www.etoro.com/en-us/

Watch the video »

Lead Stories

$4 Trillion Triple Witching Options Event, Rebalancing to Threaten Market Calm
Lu Wang – Bloomberg
All week, stock traders have shrugged off everything from hot inflation data in the US to another recession-threatening hike in interest rates over in Europe.
Now comes a $4 trillion options event that has historically stoked turbulence, just as equities are mired in the most subdued trading in two years.
/jlne.ws/3Pokxgm

Volatility, Be Gone!
Eric Wallerstein – WSJ
It’s a good day for stock investors: shares are up and volatility is down.
The Cboe Volatility Index (VIX) measures options traders idea of how much the S&P 500 will swing in the coming month. On Thursday, it’s heading for its lowest close since June, trading below 13. Historically, the VIX averages about 21. A level above 30 signals “uh oh.”
/jlne.ws/46dW0S8

Short sellers must wait to take a stab at SoftBank’s Arm Holdings soaring shares
Saqib Iqbal Ahmed – Reuters
Investors looking to bet against the soaring shares of newly-listed Arm Holdings may have to wait at least a day before the stock becomes available for shorting, analysts said. Shares in SoftBank’s Arm Holdings opened 18% above their offer price in their Nasdaq debut on Thursday, valuing the British chip designer at nearly $60 billion in its return to the public markets after seven years.
/jlne.ws/3Rt4OQ1

Gold (XAU/USD) Market Volatility Slumps to Lowest Since Start of Pandemic
Eddie Spence – Bloomberg
Gold markets haven’t been this calm since the onset of the Covid-19 pandemic, thanks to a deadlock between buyers and sellers that’s showing no signs of breaking.
Six-month historical gold volatility slumped to the lowest since February 2020 on Friday. The measure has plunged due to bullion largely staying confined to a range between $1,900 and $2,000 an ounce since mid-May.
/jlne.ws/3PDzJYs

Bitcoin Rises but Traders Brace for Losses After ‘Death Cross’ Forms
Jack Denton – Barron’s
Bitcoin and other cryptocurrencies advanced Friday as risk-sensitive assets at large enjoyed gains. Traders, however, were still bracing for declines after a key technical indicator—the so-called death cross—flashed red this week.
The price of Bitcoin has risen 1.5% over the past 24 hours to $26,650, with the largest digital asset continuing to trade around the $26,000 mark that has dominated for much of the past month. Bitcoin saw a brief selloff to mid-June lows near $25,000 earlier this week but has since rebounded in action that marked a departure from months of historically low volatility.
/jlne.ws/45Zhx1i

PFOF and its discontents; Ugh fine, we’ll debunk the GameStop conspiracy theory
Alexandra Scaggs – Financial TImes
During the meme-stonk craze of 2021, everyone had one question: Is a working-class revolution happening in the stock market? The answer was self evident: No. Some people made money in a speculative bubble, which was nice for them! Some more people lost money, which was less nice for them, but they memed a hedge fund into oblivion, which was pretty funny. And in the process they started to fancy themselves the new sans-culottes, which was very dumb.
/jlne.ws/48hX7BZ

Regulation & Enforcement

Viewpoint – Disincentivizing clearing: It’s déjà vu all over again
Walt Lukken, President and CEO – FIA
In the wake of Silicon Valley Bank’s failure, U.S. regulators announced in July a 65-page proposal to raise capital on systemically-important banks. The move would ostensibly finalize crisis-era capital reforms developed by international regulators to strengthen banks’ ability to withstand financial shocks. Contained in the proposal, however, are changes that go beyond these standards to raise the amount of capital required for the clearing of over-the-counter (OTC) derivatives.
This is a dangerous move that disincentivizes hedging among businesses, runs counter to reforms aimed at preventing government bailouts, and increases costs for consumers and businesses.
/jlne.ws/3ZrBoDF

Technology

Rival Systems Announces Support for Spot FX Markets in its Award-Winning Risk Solution, Rival Risk
Rival Systems
Rival Systems (Rival), a leading provider of trading and risk management software, has announced support for Spot FX markets in its enterprise risk management solution, Rival Risk. This latest initiative is part of Rival’s ongoing commitment to broaden functionality and support across all asset classes. Rival Risk is renowned for its multi-asset support, encompassing equities, futures, options, bonds, and cryptocurrencies.
/jlne.ws/3sWzjDL

Strategy

Market Giving Up Gains
Cboe (Video)
In #Vol411, Dan Deming @Djd551 gives a market update, reminds us that the $VIX expiration for September is next week, lets us know that the #VIX #futures curve seems to be moving higher across the term structure and more.
/jlne.ws/3RFTe4b

Miscellaneous

Billionaire Ken Griffin freaking out ahead of ‘Dumb Money’ movie
Lydia Moynihan – NY Post
Ken Griffin has a few bones to pick when it comes to “Dumb Money” – among them the way the star-studded flick depicts his habits when it comes to expensive art. On the positive side, attorneys for the Miami-based hedge-fund titan said they “appreciate artistic endeavors.” They applauded the casting of “Parks & Recreation” star Nick Offerman to play Griffin as “inspired.”
/jlne.ws/46dGbLi

Cayman Islands to open Singapore office to lure Asia’s wealthy; Caribbean territory lays out ‘red carpet’ to attract hedge funds and family offices from region
Mercedes Ruehl – Financial Times
The Cayman Islands will open an office in Singapore by the end of the year, as the Caribbean offshore financial services centre seeks to capture more business from Asia’s hedge funds and wealthy families. An office in Singapore would allow the Caribbean territory to “better capitalise on the many new business opportunities . . . that the Asian region has to offer”, said André Ebanks, Cayman Islands financial services minister, on Friday.
/jlne.ws/463Xn5M

Billionaire Ray Dalio Pushes for Return to Hedge Fund in Succession Clash; Mr. Dalio retired from Bridgewater last year. But his successors at the world’s biggest hedge fund are discovering it’s not easy to operate with the firm’s founder looming over them.
Rob Copeland – The New York Times
Less than a year after retiring, Ray Dalio, the founder of Bridgewater Associates, the world’s largest hedge fund, is threatening his former colleagues with the one thing they have worked hard to prevent: his return. Under the terms of his retirement contract, Mr. Dalio, who left the firm full time in October, has the option to retake control of Bridgewater if its financial performance flags, according to five people with knowledge of the agreement.
/jlne.ws/3rolX2m

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The Spread

The Stock Market Has Rarely Been This Sleepy

Lead Stories The Stock Market Has Rarely Been This Sleepy Gunjan Banerji - The Wall Street Journal It's eerily calm out there in the stock market. The Cboe Volatility Index, or VIX, dropped below 12 last week, a nearly five-year low. The gauge, based on options prices...

Past Options Newsletters

The Stock Market Has Rarely Been This Sleepy

The Stock Market Has Rarely Been This Sleepy

Lead Stories The Stock Market Has Rarely Been This Sleepy Gunjan Banerji - The Wall Street Journal It's eerily calm out there in the stock market. The Cboe Volatility Index, or VIX, dropped below 12 last week, a nearly five-year low. The gauge, based on options prices...