“Alex Perry’s Optionstopia” takes a look at this week’s options news highlights: Coinbase Purchases FairX; NinjaTrader Acquires Tradovate; UBS Faces Legal Battles
Options News Script
This is Alex with John Lothian News, and this is your recap of options news from the week. Here’s some of the week’s top stories, starting with:
1–Coinbase Buys FairX to Launch Crypto Derivatives
Nikhilesh De – Coindesk
This week was a big one for Fintech, as it was announced that the crypto trading platform Coinbase is buying the CFTC-regulated derivatives exchange FairX. Coinbase said in its blog that the acquisition is a “…key stepping stone on Coinbase’s path to offer crypto derivatives to retail and institutional customers in the US.” Seeking Alpha reported that the move was in an effort to “bring regulated crypto derivatives to the market, initially through FairX’s existing partner ecosystem.” Given that there aren’t many exchanges that allow bitcoin and ether futures trading for investors, the news site Coindesk believes that the purchase of FairX could be a smart move.
2–NinjaTrader Acquires Tradovate
NinjaTrader Acquires Tradovate; Acquisition of Cloud-Based Trading Infrastructure Further Strengthens Leadership Position in Retail Futures Industry
NinjaTrader Acquires Tradovate, a press release from Tradovate. The acquisition creates “a formidable retail futures broker with combined trading volume in 2021 of around 100 million futures contracts” according to LeapRate.
And the acquisitions keep on coming, with the retail trading software developer and broker NinjaTrader acquiring the futures brokerage firm Tradovate for a price tag of $115 million. Ninja Trader was founded in 2003 and now serves over half a million traders, while Tradovate provides a cloud-based futures trading platform. According to a Tradovate news release, the acquisition creates “…one of the most formidable retail futures brokers with combined trading volume in 2021 of approximately 100 million futures contracts.” NinjaTrader CEO Martin Franchi commented that the company’s move to purchase Tradovate will meet the growing demand for innovative products and services while also making the platform more easily accessible
3– UBS Sued Over YES Options Strategy
Andrew Welsch – Barron’s
In other news, UBS is facing some legal woes. The Swiss investment bank has about $4.8 billion in assets, and some people want a slice of that billion-dollar pie. As reported by Barrons, investor Christian Dumontet is suing UBS over the company’s Yield Enhancement Strategy, or YES Options strategy. Dating back to 2015, the YES Strategy offered a specific type of options strategy where, according to investorlawyers.com, there would be “diversification along with stable, incremental returns through low yield.”
But some are saying that the expectations did not match the reality. In fact, according to Barron’s, Dumontet – along with 1,500 others- invested about $ 5.7 billion into the YES strategy. So what does UBS have to say about all this? Barron’s reported that while
they haven’t yet issued a legal response to the lawsuit, a UBS representative said the YES strategy is for experienced investors with a “…long, successful track record.” They go on to say that “UBS disclosed all relevant risks to investors.”
4– CME Group Achieves Record International Average Daily Volume of 5.5 Million Contracts in 2021
[CME] The Chicago Mercantile Exchange or CME Group has set international records, this week announcing an average daily volume (or ADV) of 5.5 million contracts in 2021. This was up 4% from 2020, with an overall global ADV of 19.6 million contracts throughout 2021. The world’s largest financial derivatives exchange noted that between growth in interest rate products and high volumes in Europe and Asia, that is what really pushed the CME to achieve this record.
5–Robinhood Announces Employees Can Permanently Work From Home
Robinhood Tells Employees They Can Work From Home Permanently; Retail-trading platform wants to become ‘a remote first company’ as many employers reconsider when they should return to the office
Joseph De Avila – WSJ
Working from home has become a way of life for many of us, and Robinhood is allowing most of its employees to do it…indefinitely. Employees of the trading app are saying goodbye to the physical workspace, and hello to what Robinhood calls, “a remote first company”. While many other companies plan to eventually return to the workplace, Robinhood says that going fully remote offers more flexibility to its employees. But the company’s performance over the past year could indicate a different reason. The company is currently priced around $15 a share, which is quite the difference from last year’s peak of around $70 per share in August. The price has been on a steady decline ever since, which could be a sign that the retail options trading platform could now be a potential takeover target.
That’s all for now over here, but tune in for this week’s edition of John’s Take. Also, be sure to check out this week’s “Options Term of the Week,” as Tom Jarck explains “VSPIKES”.
THIS HAS BEEN ALEX PERRY FOR JLN. THANKS, AND WE’LL SEE YOU NEXT TIME.