As stocks fall, options traders show no rush to guard against deeper pullback
Saqib Iqbal Ahmed – Reuters
U.S. stocks are experiencing the biggest wave of volatility in months but options traders are showing little appetite for more protection, a sign that at least some of them believe the current selloff will be short-lived.
The Cboe Volatility Index, known as Wall Street’s “fear gauge,” stood at 27.5 on Monday, its highest level in more than four months, as concerns about heavily indebted Chinese property company Evergrande added to jitters over global growth. The S&P 500 tumbled 2.5% on Monday, on pace for its largest decline since Jan. 27.
Evergrande jitters send Wall Street’s ‘fear gauge’ to biggest pop in over 6 months and yields tumble the most in weeks
Mark Decambre – MarketWatch
A measure of implied volatility on Wall Street Monday rose by the most since February as the Dow Jones Industrial Average DJIA, 0.11% tumbled nearly 1,000 points at its lows on concerns about China’s property market highlighted by the potential collapse of China Evergrande Group. The CBOE Volatility Index VIX, -8.17% jumped by about 32% to 28.30, marking its biggest one-day rise since Feb. 25, when it rose 35.4%, FactSet data show.
FTX boss Sam Bankman-Fried told us why US derivatives are ‘a huge missing piece of the crypto ecosystem’ that present ‘an absolutely huge opportunity’ — and breaks down 3 big trends on his radar
Vicky Ge Huang – Insider
For all the talk of a crypto derivatives market boom, US derivatives remain “a huge missing piece of the crypto ecosystem,” according to FTX founder and CEO Sam Bankman-Fried. For example, a total of $160 billion in crypto traded globally on Wednesday morning, of which one-third was in spot trading while two-thirds were in derivatives, according to FTX’s global volume monitor.
Evergrande Watchers May Finally Get a Hint About China’s Stance
Tian Chen – Bloomberg
Investors seeking hints about how Beijing plans to deal with China Evergrande Group’s debt crisis are training their crosshairs on the central bank’s liquidity management.
The People’s Bank of China will resume daily open-market operations Wednesday after a holiday break, and a large net injection may signal Beijing’s intent to reduce systemic stress after the Evergrande crisis roiled global equities. On the other hand, if the PBOC withdraws funds, that could mean it’s prepared to tolerate higher market volatility as the developer moves closer to a default.
Will the Stock Market Continue to Crash? Watch this Number.
Jacob Sonenshine – Barron’s
Was Monday’s selloff indicative of the big stock market correction that Wall Street has been calling for? Analysts are watching a key level for clues.
The S&P 500 had its worst day in months Monday, tumbling 1.7% on fears that property giant China Evergrande Group’s (ticker: 3333.Hong Kong) troubles may spill over into other markets. Investors are also growing uncertain as the Federal Reserve’s meeting nears and negotiations over the Congressional budget and debt ceiling continue.
JPMorgan’s market guru says the Evergrande crisis is a chance to buy the dip in US stocks – and predicts the S&P 500 will surge 8% by year-end
Harry Robertson – Markets Insider
JPMorgan’s market guru has said the biggest stock sell-off since May, triggered by fears over Chinese property developer Evergrande, is a good opportunity for investors to “buy the dip.”
Marko Kolanovic – the bank’s head of quantitative research – and colleagues said in a note on Monday that they are still bullish on stocks despite a recent rough patch.
U.S. Stock-Market Tumble Hasn’t Quelled Optimism
Caitlin McCabe – WSJ
U.S. stocks are facing their most uncertain outlook since the Covid-19 pandemic sent the market tumbling last year. But many investors say there is no better place to be right now.
Major U.S. stock indexes sank Monday, with the Dow Jones Industrial Average losing more than 600 points, or 1.8%, as concerns grew that a default by real-estate developer China Evergrande Group could spur a widespread retreat from riskier assets. Percolating worries about a slowdown in economic growth, ongoing supply-chain issues and rising deaths tied to the Delta variant of the coronavirus added to the volatility.
S&P 500’s Late Bounce Came on Extreme Volume in Futures Market
Lu Wang – Bloomberg
The late-afternoon bounce in U.S. stocks came amid a trading frenzy in the futures contracts.
More than 320,000 contracts changed hands in the 30 minutes through 4 p.m. in New York, almost three times as many as the average during comparable periods in the previous four hours, data compiled by Bloomberg show.
Bitcoin Trims Losses Ahead of Major Options Expiry
The price of bitcoin (BTC) has dropped slightly in the past day, after heavy selling yesterday brought it down to a low of USD 40,200. The selling comes just ahead of one of the largest bitcoin options expiry days of 2021, on September 24.
At 13:44 UTC, BTC was down by 1.6% over the past 24 hours to a price of USD 43,255
Volatility ETFs Spike on Evergrande Collapse Fears
CONTRIBUTOR: Sweta Killa – Zacks
Market volatility roared back especially on fears over the potential collapse of property developer China Evergrande Group. The Chinese real estate juggernaut, which has been sitting on a huge debt of more than $300 billion, could default on its interest payment of $150 million due later this week, potentially triggering a global financial meltdown like the post Lehmann Brothers collapse.
New derivatives trading system J-GATE3.0 has gone live
Osaka Exchange (OSE) and Tokyo Commodity Exchange (TOCOM) today successfully launched the new derivatives trading system, J-GATE3.0, on schedule. Related listings of new products, revisions of trading rules such as the expansion of trading hours and the transfer of the J-GATE3.0 backup function to the Kansai Data Center were also completed.
Iwanaga Moriyuki, President and CEO of Osaka Exchange, Inc. (and Representative Director and Chair of Tokyo Commodity Exchange, Inc.), commented: I would like to announce that OSE and TOCOM have successfully launched the new derivatives trading system, J-GATE3.0, and that its first trading day has finished without any trouble. I would like to express my deep gratitude for the extensive and kind cooperation we have received from trading participants and related vendors in preparation for this system replacement.
Binance Drops Crypto Futures, Options in Australia
Nicholas Pongratz – BeInCrypto
Binance, the world’s largest cryptocurrency by volume, will stop offering cryptocurrency futures and options to its Australian customers. In an announcement on its blog, Binance said the move was part of its constant evaluation of products and services to comply with local regulations. As part of the policy change, the exchange will also stop offering leveraged tokens to its Australian users.
Inside Volatility Trading: Professional Sports, Global Equity Markets and Volatility
Kevin Davitt – Cboe Global Markets
Index Characteristics & Volatility
The National Football League (NFL) kicked off their season on September 9th when the Dallas Cowboys played last year’s super bowl champs, the Tampa Bay Buccaneers. Because they generate billions of dollars in revenue annually, professional sports have become increasingly quantitative just like global equity markets.
Bermuda Stock Exchange Begins Publishing MIAX Pearl Equities Market Data to the Pyth Network
MIAX, creator and operator of high performance securities exchanges, products and services, today announced that the Bermuda Stock Exchange (BSXTM), a wholly-owned subsidiary of Miami International Holdings, Inc., the parent company of MIAX, has successfully commenced publishing MIAX Pearl Equities market data for 10 actively traded U.S. companies to the Pyth Network. This is the first initiative by BSX to provide high fidelity data to the Pyth Network.
Montreal Exchange goes live with Asia Pacific trading hours to drive global expansion
The expansion comes as part of the exchange’s extended trading hours initiative originally launched in 2018.
Annabel Smith – The Trade
Canada’s derivatives exchange, Montreal Exchange (MX), has extended its trading hours to Asia Pacific time in the latest phase of its ongoing globalisation plans.
Regulation & Enforcement
Finance industry warns against ‘unnecessarily restrictive’ crypto capital rules
Joshua Oliver and Philip Stafford – Financial Times
The global financial industry has urged regulators to refrain from imposing stringent capital rules on digital assets, warning these requirements would drive activity underground and deprive banks of the benefits of the technology.
Trade groups representing banks, asset managers and the blockchain industry told the Basel Committee on Banking Supervision that the authorities’ proposals would make it too expensive for banks to participate in the rapidly growing crypto industry and related technologies.
JP Morgan electronic equities exec departs for BestEx Research to head up execution
New director of execution services at BestEx Research has previously served at JP Morgan Chase, Virtu Financial, KCG Holdings, Bank of America Merrill Lynch and Barclays.
Annabel Smith – The Trade
A former JP Morgan Chase equities electronic trading executive has left the bank to join algorithmic trading platform provider BestEx Research to head up execution services.
Darren Zhou has joined BestEx Research as director of execution services after most recently serving for the last three years at JP Morgan Chase in an electronic equities trading role.
Goldman’s Oppenheimer Says Use 10% Dip in Stocks to Get Back In
Farah Elbahrawy and Kailey Leinz – Bloomberg
Investors should use a 10% market correction to load up on stocks, according to Peter Oppenheimer, Goldman Sachs Group Inc.’s chief global equity strategist.
“I think fundamentally that’s probably a good time to be getting back in,” Oppenheimer said Tuesday in an interview with Bloomberg Television. “Fundamentally, we’re still in the relatively early stages of this economic cycle,” as rates remain low and profit growth is “reasonable” despite the pullback in emergency support, he said.
Understanding the SEC’s evolving derivatives regulatory framework
Part of the L&C webinar series
23 September 2021 • 10:00 AM – 11:00 AM ET
Bitcoin Doesn’t Just Represent The Future, But Also The Past
Contributor: Patrick Baker, Bitcoin Magazine
A legacy trader reflects on how the bitcoin market mirrors the past, and is poised to overtake the traditional market in the future.
Like many, the more I learn about Bitcoin and cryptocurrency markets, the more I see the future of the world economy. However, as a former market maker that started trading equity options on the floor of the Chicago Board Options Exchange in 2001, when it comes to trading in this industry, it feels a lot like old times.