Observations & Insight
****JJL: The CME Group has issued the following notice: “Amendments to and Delisting of Certain CME and CBOT Products in Connection with the Elimination of Most CME and All CBOT Open Outcry Trading Pits and Related Frequently Asked Questions for Members and Member Firms.”
In connection with the decision to permanently close all CBOT open outcry trading pits and all CME open outcry trading pits other than the CME Eurodollar options trading pit, the following CME and CBOT product delistings and product amendments are being implemented. — CME Group
AMC Stock-Price Surge: Veteran Options Trader on 3 Drivers of It
Vicky Ge Huang – Business Insider
The meme-stock-investing saga is back in full force.
As of Monday’s market close, AMC Entertainment and GameStop were up a whopping 2,446% and 1,913% this year. The S&P 500 had gained a more modest 14%.
Short interest in meme stocks drops as hedge funds target call options
Kate Marino – Axios
The origin story of the meme stock phenomenon centered around an uprising by retail investors, who wanted to make money at the expense of Wall Street short-sellers.
But in today’s meme stock world, there’s not that much short interest in the names most popular with the WallStreetBets crowd. Instead, trading activity appears to be increasingly driven by call options, the Wall Street Journal reports.
Denmark’s first meme stock plunges another 37% as a key broker warns of the risks extreme trading poses to investors
Shalini Nagarajan – Markets Insider
Shares in Danish biotech Orphazyme tumbled in regular European market hours on Monday as last week’s massive surge during US trading reversed after the weekend.
When trading opened in Copenhagen, its stock plunged as much as 37%. Shares had already fallen 50% on Friday after the company said it wasn’t aware of any reason for the extreme volatility behind the stock move.
Meme-stock traders start to converge on shares of insulin-pump maker Senseonics
Thornton McEnery – MarketsWiki
After gorging on shares of Wendy’s WEN, cheeseburgers and Frosties last Monday, meme stock pickers on Monday appeared to be in need of a shot of insulin, according to data from a popular social-sentiment tracker.
Shares of Senesonics, the maker of insulin pumps, were buzzing on Monday after its profile rose considerably on social media over the weekend with individual investors taking interest in the stock as a potential serious squeeze target. According to data from HypeEquity, mentions of Sensonic were up 600% on volume.
Goldman Expands in Crypto Trading With Plans for Ether Options
Anchalee Worrachate – Bloomberg
Goldman Sachs Group Inc. is moving beyond the world of Bitcoin and expanding into Ether.
The bank plans to offer options and futures trading in Ether, the coin that fuels the Ethereum network, in the coming months, according to Mathew McDermott, head of digital assets at Goldman.
It’s the latest step in the Wall Street giant’s crypto ambitions after Goldman restarted a trading desk this year to help clients deal in publicly traded futures tied to Bitcoin. McDermott said the bank also plans to facilitate trades via exchange-traded notes tracking Bitcoin.
Letter: Central banks overlook exchange traded fund risk
Phil Naylor – Financial Times
As the amount of funds invested through exchange traded funds and other index-driven passive vehicles rises to $8tn globally (Report, June 2), central banks are overlooking certain key risks that could pressure global financial systems.
First, increasing concentration among top ETF providers is propelling idiosyncratic risks, such that if any one of the top three players gets into trouble — be it through cyber attacks or other black swan events — withdrawals could pressure the entire market.
Corporate Bosses Make Well-Timed Stock Sales in SEC ‘Blind Spot’
Matt Robinson – Bloomberg
When Abbott Laboratories chief Miles White cashed out $32 million of stock and options in 2019, shareholders had reason to shrug it off. Online regulatory filings said the sales were part of a “previously adopted plan” — a sign they weren’t based on any current inside information.
It turns out, the disposals that Monday had been set up the previous Friday. To learn that detail, investors would have to track down the plan he filed with the Securities and Exchange Commission by traveling to the agency’s headquarters in Washington, clearing security and digging into a filing cabinet.
Hedge funds bullish as oil prices hit multi-year highs: Kemp
John Kemp – Reuters
Hedge funds boosted their position in petroleum last week to pre-pandemic levels, encouraged by signs of a rapidly recovering global economy and continued output restraint among U.S. shale producers.
Money managers purchased the equivalent of 52 million barrels in the six most important petroleum futures and options contracts in the week to June 8, exchange and regulatory data shows.
Cboe Global Markets Announces New Community Engagement Program, Cboe Empowers
– Cboe Empowers to provide mentorship, scholarship and guidance to under-resourced students from elementary school to college and beyond
– Program initially launched in Chicago with support from Greenwood Project, Working in the Schools
CHICAGO – June 14, 2021 – Cboe Global Markets, Inc. (Cboe: CBOE), a market operator and global trading solutions provider, today announced the creation of Cboe Empowers, a community engagement program that provides mentorship, scholarship and guidance to under-resourced students throughout their educational journey through access to Cboe’s associates, resources, work environment and other learning and experience opportunities.
ICE Reports Record Total Futures and Options Open Interest of 85.8 Million Contracts
Total Open Interest +10% y/y
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, today announced record open interest of 85.8 million contracts on June 10, 2021. The record depth of liquidity across ICE’s markets is being driven by products including: ICE Low Sulphur Gasoil, the global benchmark for refined products, open interest is up 22% year-over-year (“y/y”) across futures and options; ICE TTF natural gas futures, which is at record open interest of 1.96 million contracts, up 21% y/y;
Beware this week’s larger G10 FX option expiries
The cash (delta) hedging flows associated with FX options can increase as their related strikes draw close to each day’s 10 a.m. New York cut expiry, potentially drawing/containing the FX rate and adding support/resistance, so it’s worth knowing in advance where the larger strikes reside.
A lot of the big strikes that were pinning EUR/USD to the upper 1.21s expired last week, but there are still more than 2.5 bln euros between 1.2150-1.2200 to add topside resistance on Monday . There are 1 bln euros at 1.2115-20 on Wednesday, while post FOMC on Thursday there are 1.3 bln euros between 1.2050 and 1.2100, 800 mln euros at 1.2195-1.22, a huge 2.8 bln euros at 1.2220-25, and 2.2 bln euros at 1.2300. Friday sees 2.7 bln euros at 1.2100-10 and 2.7 bln euros at 1.2250-55.
VIX: ‘Love Gauge’ More Than ‘Fear Gauge’
Reel Ken – Seeking Alpha
Investors seem to have a misplaced fear of the “Fear Gauge” itself. A simple understanding of its characteristics can turn that fear into love.
Finding “love” starts with accepting the VIX as an investment vehicle, not just some sort of metric that hopes to predict the movement of stocks.
Approaching the VIX from the proper viewpoint results in high probability low risk money making opportunities. One just needs to recognize when it is present.
One low risk way to invest in the VIX uses a unique strategy, one I call the “Splintered Ratio”.
“Modal Frequency” – a unique characteristic of the VIX – offers an interesting money making opportunity.
Technological revolution for clearing derivatives
30 June 2021 • 9:30 AM – 11:00 AM SGT
As the global volume of exchange-traded derivatives continues to rise, entities have been preparing for post-pandemic work environments. Be it in-person, remote or a hybrid of the two, these challenges place a burden on operational capacity with the potential to interrupt processes. What transformational level of efficiency across derivatives operations is needed? Can the technology sector develop industry-wide utility solutions to achieve efficiencies such as streamlining manual processes, automating reporting and risk management, etc? This panel will discuss core areas of concern along with the technological innovation in the cleared derivatives industry and impact in the Asia-Pacific region.
Goldman Sachs ramps up cobalt trading; Battery metal in hot demand because of electric vehicle boom but hedging options are scant
Henry Sanderson – FT
Goldman Sachs has stepped up its trading in battery metal cobalt, latching on to one of the hottest corners of the commodities market as carmakers transition to electric vehicles.
Return to Office: Fed-Up Young Workers Look to Offices to Save Their Careers
Marc Daniel Davies – Bloomberg
Managers hoping to lure employees into offices may find their youngest and newest staff are their strongest allies.
Young white-collar staff feel caught between a rock and a hard place — they value quality of life over old-fashioned 9-5 commuting, but are even more worried about seeing their careers stall unless they head back into an office. That’s encouraging many to be among the first to return to their desks.
Look, who gamified my Dalal Street! It’s all about intra-day trade & index options now
R Venkataraman – Economic Times (India)
Last week, while interviewing potential job seekers, I was pleasantly shocked. Mr A, not a Marwari or Gujarati, engineer from IIT Mumbai, after passing out with a degree in civil engineering, has become a day trader. He is trading Nifty futures and options from his one BHK flat in Jogeshwari. He shares the flat with his batchmate, who has a regular job in a fintech in Powai. Even his friend trades, though not full time. And he clarifies that he is not alone.