‘50 Cent’ Profited From Volatility Jump, Wells Fargo Says; Traders Brace for More Stock Volatility

Feb 3, 2020

Lead Stories

’50 Cent’ Profited From Volatility Jump, Wells Fargo Says
Joanna Ossinger – Bloomberg
The options player known as “50 Cent” — or someone using a similar trading strategy — has profited from a flurry of bullish volatility bets over the last two weeks, according to Wells Fargo & Co.
Since mid-January, there has been an increase in purchases of bullish call options on the Cboe Volatility Index for around 50 cents each. That’s a trade reminiscent of the original “50 Cent” strategy in 2017 — so called as a play on the stage name of rapper Curtis J. Jackson III — although this time the buyer has already taken profits on the trade, according to Wells Fargo’s Pravit Chintawongvanich.

Traders Brace for More Stock Volatility
Gunjan Banerji and Michael Wursthorn – WSJ
Investors are betting the volatility that has rattled markets over the past two weeks is here to stay.
Many are bracing for dramatic swings in stocks as the U.S. presidential election season ramps up and investors assess the impact of the coronavirus outbreak on global economic activity.

Here’s why one expert says the US has been immune to the latest coronavirus stock meltdown
Gwen Everett – Markets Insider
Major US indices opened higher Monday, as the coronavirus alarm that sent China’s benchmark stock index to its worst opening in nearly 13 years stopped short of US shores.
The relative optimism in US stocks may be a signal that investors don’t have many other places to turn. With emerging markets more vulnerable and Treasuries “overbought” to the point of making their safe-haven status unappealing, US stocks may appeal to investors looking for a dollar-based asset amidst the selloff, John Stoltzfus, analyst at Oppenheimer, told Markets Insider.

Wall St Week Ahead-RPT-Earnings volatility set to kick in as coronavirus worries mount
April Joyner – Reuters
Concerns over the outbreak of coronavirus from China have largely overshadowed corporate results, but the back half of the earnings season could hold greater sway over the performance of individual stocks. Earnings-related stock moves have been smaller this season in comparison with the average over the past 12 quarters, according to data from options research company ORATS. The muted moves reflect a broader trend of subdued volatility that had limited price fluctuations in a range of assets over the last several months.

Options Growth Will Ignite Innovation in the Bitcoin Market – But Not in the Way You Think
Richard Rosenblum – Coindesk
Like futures, the launch of bitcoin options on major exchanges has been met with anticipation. Hopeful observers believe the CME’s and Bakkt’s entry into the burgeoning options market will further encourage institutional participation. It will – but not necessarily in the way they expect.

Deribit Leads CME, Bakkt In Crypto-Options Trading Volumes
The cryptocurrencies derivatives marketplace has been constantly evolving as new BTC options have seen increasing popularity among the institutional clients. While the Netherlands-based crypto derivatives exchange, Deribit is leading the show this time. They recently made an announcement that the firm would be unveiling Bitcoin daily options commencing from 3rd February with a BTC contract set to expire every day of the year. This segment of crypto-options markets is considerably dominated by the unregulated firms who play the role strong counterparts of CME and Bakkt.

Exchanges and Clearing

Eurex Improve – it’s all in the name
Imagine a functionality which allowed end-customers’ orders to benefit from the full price competition of Eurex’s order book, while being guaranteed to be executed in case markets move to the customer’s disadvantage. Wouldn’t that be a huge improvement?

Product Modification Summary: Reduction of CME Globex Trading Hours of the Black Sea Wheat and Black Sea Corn (Platts) Futures and Options Contracts – Effective: February 24, 2020
CME Group
Effective Sunday, February 23 for trade date Monday, February 24, and pending all relevant CFTC regulatory review periods, please be advised that the Chicago Board of Trade. (CBOT or EXCHANGE) will amend the Globex trading hours for the products listed on CME Globex.

Regulation & Enforcement

Options Trader Alert #2020 – 2 Nasdaq GEMX and Nasdaq ISE Updated Pricing Effective February 3, 2020
Effective Monday, February 3, 2020, pending filing with the SEC, Nasdaq GEMX (“GEMX”) and Nasdaq ISE (“ISE”) will amend pricing as described below:

SR-NASDAQ-2020-005 Notice & Approval
Proposes certain changes regarding investments of the First Trust TCW Opportunistic Fixed Income ETF


How Investors Can Use Options Trades to Profit During Earnings Season
Al Root – Barron’s
It’s earnings season, and for every Amazon.com, which gained more than 8% after beating forecasts, there’s a Facebook, which dropped more than 6%. It might be hard to predict how a stock reacts to earnings, but investors can look to the options market for clues to what Wall Street expects. It can also help identify opportunities for short-term trading gains. Options prices are determined by a few things, with volatility being one of the biggest factors. The more a stock fluctuates, the higher the odds an options contract will be worth something.


How the coronavirus outbreak has delivered a shock to stocks, bonds and other assets in January
Mark DeCambre – MarketWatch
A monthlong bout of coronavirus has ravaged China, claiming hundreds of lives and sickening thousands but the Asian influenza also has infected the stock market and other assets, chilling bullish sentiment for the moment and stoking uncertainty at a period of lofty valuations. Heightened anxieties around coronavirus comes as the number of people infected world-wide approaches 10,000 and as authorities from the Centers for Disease Control and Prevention reported the first quarantine in the U.S. in 50 years, as the U.K. and Russia each announced their first cases of the deadly illness that has drawn comparisons to SARS, severe acute respiratory syndrome.

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