Alex Perry’s Optionstopia: Fed Moves Up Bond Taper, $65 Mln Option Bet & Blockbuster Options Activity in Alex Perry’s Optionstopia.

ALEX PERRY

ALEX PERRY

Associate Editor

Hi, this is Alex with John Lothian News, and this is your recap of options news from the week. Here are some of this week’s top stories:

Fed Interest Rate Decision
https://www.wsj.com/articles/fed-officials-project-three-rate-rises-next-year-and-accelerate-wind-down-of-stimulus-11639594785?mod=hp_lead_pos1

https://www.marketwatch.com/story/what-the-fed-decision-means-for-your-wallet-and-your-credit-card-bill-11639595377

https://www.cnn.com/2021/12/15/economy/federal-reserve-powell-inflation-taper/index.html

https://www.cnbc.com/2021/12/15/follow-along-to-real-time-updates-of-the-big-fed-decision-and-powells-press-conference.html

Anticipation was high this week as traders awaited the decision of the Federal Reserve. On Wednesday, the central bank announced it would begin to reduce bond purchases by $30 billion a month in March, instead of June, a move that will ultimately end the bond-buying program. This was quicker than expected and could lead to an earlier interest rate rise in 2022. Federal Reserve Chairman Jerome Powell also talked about how to lower inflation, which, according to CNN last week, has “risen to a 39-year high over the 12-month period ended in November.” Given the uncertainties of the omicron variant, Powell said that, ​​“moving forward the end of our taper by a few months is really an appropriate thing to do.”

Fed officials believed earlier that higher price pressures this year were from supply-chain bottlenecks and that they would get better over time. But as CNN explained, “… the central bank also reserves the right to change the pace of monthly purchases again if the economic outlook demands it…” Essentially, along with impending rate hikes, traders can also expect higher inflation to remain, which  can significantly impact annual percentage rates, or APR, for loans, including mortgages. But higher rates are not limited to the U.S. On Thursday  The Bank of England announced it had increased interest rates for the first time since the start of the pandemic.

Trader Bet $65 Million in Options on Stock Rebound Into Holiday

https://www.bloomberg.com/news/articles/2021-12-14/one-trader-wagered-65-million-on-stock-rebound-into-holiday?sref=wgRWWeJL

One wealthy investor made headlines this week with the purchase of $65 million in options. Blomberg reported that the investor bought nearly 20,000 call spreads that are linked to the S&P 500 and expire right before the Christmas holiday. The investor also sold calls with a strike price at about 4,700. Bloomberg says that this is to fund those bullish options positions. Considering that U.S. stocks fell this week, we can’t help wondering about the investor’s strategy. When it comes down to the reasoning behind the bet, Bloomberg reporter Lu Wang wrote that “the strategy behind the trade is impossible to discern.”

FIA: Global Exchange-Traded Volume up 38.8% in November; Open Interest Posts Record

https://johnlothiannews.com/fia-global-exchange-traded-volume-up-38-8-in-november-open-interest-posts-record/

Exchange-traded volume saw a new high this week as the FIA’s monthly report recorded a higher volume again in November. As JLN’s own Suzanne Cosgrove reports, 6.17 billion futures and options contracts were traded in November, which is a notable rise of 11.5% from the previous month. 

Simon Ho, CEO of T3 Index Explains T3 Index Products 

https://vimeo.com/manage/videos/622687046

Simon Ho Explains T3 Index Products

https://t3index.com/

Recently, John Lothian News sat down with T3 CEO Simon Ho. For those unfamiliar with T3, the firm is a research-driven financial indexing firm that handles everything from a crypto volatility index to a SPIKES Volatility index, along with a host of other indexes and products.  And when it comes to these products, especially crypto, Ho says the demand is high. Crypto volatility products from T3 focus on bitcoin and ethereum. T3’s history, SPIKES, and even a new venture called the Yield Volatility Index are all discussed in this interview, so be sure to check it out.

January 2022 Options Now Available For iShares Trust – iShares Russell 2000 ETF (IWM)

Nasdaq

/bit.ly/3m4uUbq

Investors looking to trade January 2022 options contracts for iShares Trust are in luck. iShares Trust is an assortment of ETFs that monitor bond and stock market indexes. Nasdaq reported that new iShares Trust options contracts are now available, with expiration in January 2022. This also includes a put contract at a $215.00 strike price, which Nasdaq says has a current bid of $6.72. 

AMC Entertainment: Blockbuster Options Activity

Craig Jones

https://www.benzinga.com/trading-ideas/short-ideas/21/12/24614408/amc-entertainment-blockbuster-options-activity

It’s the end of the week and what better way to start the weekend than by grabbing your butter and your popcorn because AMC – yes, the theater chain – is making headlines for its options activity. Having battled the omicron uncertainties, this week Benzinga’s Craig Jones reported that after Monday’s 15% selloff, AMC Entertainment Holdings, Inc. rose nearly 6% on Tuesday. Now, the largest movie theater chain in the world is trading at relatively normal volumes. Benzinga also noted that “the most active puts were the December 20th… with buyers of 44,000 contracts at an average price of 64 cents per contract.” Apparently, investors think the stock will decline by at least 20% by the end of the week.

And since you’re still here with us, be sure to check out John’s Take as he dives into the topic of meme stocks and options. While you’re there, check out our new “Options Term of the Week,” where Jermal Chandler will explain European-style options.

 

THANKS FOR WATCHING AND MERRY CHRISTMAS AND HAPPY HOLIDAYS FROM JLN. 

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