‘Big Short’ investor Michael Burry teases a bet against crypto – and warns market speculation has reached historic levels

Oct 14, 2021

Observations & Insight

Women In Listed Derivatives (WILD) is currently accepting applications from members for the WILD Board of Directors. The application process will close on November 8th. The group is looking for board member candidates who believe in its mission to highlight and learn from industry role models, encourage career development and support the advancement of women in listed and over the counter derivatives and are willing to be active in governance roles. You can email Penny Copleston at board@womeninlistedderivatives.org to request a Board of Directors application form. ~SR

Lead Stories

‘Big Short’ investor Michael Burry teases a bet against crypto – and warns market speculation has reached historic levels
Theron Mohamed – Markets Insider
Michael Burry, who made his name and fortune by betting against the housing bubble, has set his sights on a new target: cryptocurrencies.
“Ok, I haven’t done this before, how do you short a cryptocurrency?” he said in a now-deleted tweet this week. “Do you have to secure a borrow? Is there a short rebate? Can the position be squeezed and called in?”

Wall Street Stays Serene in Face of Surging Prices. What to Watch.
Potentially market-moving events are coming thick and fast but it’s all very serene on Wall Street. The Federal Reserve’s minutes released Wednesday showed its tapering plan remains on track and even suggested a slightly quicker timeline, potentially beginning mid-November. On top of that, U.S. inflation data came in higher than expectations as consumer prices rose 0.4% in September and 5.4% on an annual basis.

Fed Official Sees Risks of More Persistent Inflation
Nick Timiraos – WSJ
A Federal Reserve official warned in a speech Wednesday night of growing risks that supply-chain disruptions could keep inflation elevated for longer than forecasters have anticipated.
While monthly inflation readings should decline from high rates observed in the spring, “I still see a material risk that supply-related pricing pressures could last longer than expected,” said Fed governor Michelle Bowman in remarks prepared for delivery at South Dakota State University in Brookings, S.D.

Bitcoin bulls target prices above $58K ahead of Friday’s $820M options expiry
$820 million in BTC options expire on Oct. 15, and data signals that bulls are set to celebrate another positive week.
Marcel Pechman – Cointelegraph
Everyone is talking about a six-figure Bitcoin (BTC) price now that the digital asset has broken out of its multi-month downtrend and confirmed that a bullish trend is in play.
If Bitcoin happens to enter a parabolic move toward $110,000, that would finally match PlanB’s Stock-to-Flow model prediction. According to the pseudonymous analyst, the scarcity and valuation of gold and other precious metals and “Elon Musk’s energy FUD and China’s mining crackdown” are a few of the factors responsible for the past five months of 50% or higher inaccuracy in the model.

European stocks rise past two-week highs on earnings optimism
Sruthi Shankar and Susan Mathew – Reuters
European stocks rose on Thursday, hitting the highest in more than two weeks as investors bet a steady economic recovery from the pandemic-induced slump will support corporate earnings despite signs of elevated inflation.

Investors Piled Into Energy ETFs. The Next Move Could Be Harder.
Avi Salzman – Barron’s
Oil and gas stocks are starting to attract the eye of more investors, as the prices of those commodities soar. Even more so, investors have been flocking to energy exchange-traded funds, and appear to be more bullish than they have been in years.
Citigroup analyst Scott Chronert called the increase in investment in energy ETFs “astounding” in a note released late on Wednesday. And it’s not just ETFs. Chronert says the options market shows “the most bullish aggregate energy positioning backdrop in years.”

Opinion: Here’s why you should be more concerned about the S&P 500’s small declines
Lawrence G. McMillan – MarketWatch
The S&P 500 index continues to trend lower. This downtrend can clearly be seen on the accompanying chart, where there is a series of lower highs and lower lows, as denoted by the descending blue lines.
Even though most investors probably are not too concerned since the decline has been small and rather steady, trading has been frothy and volatile within the blue lines. There have several gap openings, all of which have been closed at the current time. There is support at the horizontal red lines on the chart, the nearest of which is at 4230.


14 Potential Winners for Options Investors This Earnings Season
Steven M. Sears – Barron’s
At the start of the third-quarter earnings season, let it be said that investors are nervous, analysts are generally worried about earnings growth, and the options market is a cauldron of coiled anxiety.
The cause for this sour sentiment? Expectations that the Federal Reserve may soon raise interest rates, for a variety of reasons.


Crypto, options, margin, REITs: How to tackle the market’s most complex areas
Jessica Mathews – Fortune
This article is part of Fortune’s quarterly investment guide for Q4 2021.
The good news: The market’s most exotic tools are now available to everyday investors. And yes, that’s also the bad news.
Markets are complex to start with, much more so than slick trading apps can make them seem. The click of a “buy” button triggers a sequence of near-instantaneous algorithms, behind which billion-dollar intermediaries execute your trade then deliver shares into your account. Add, say, a derivative to that already complex equation, and it’s enough to make the mind reel.


ISDA Launches Future Leaders in Derivatives Program
The International Swaps and Derivatives Association, Inc. (ISDA) has launched a new professional development program for emerging leaders in the derivatives market to help support their career progression and enable them to gain experience of working alongside other practitioners from all parts of the derivatives industry.

FIA SEF Tracker Monthly Overview; High-level view of recent trading activity
The SEF Tracker Overview provides a high-level visualization of recent trading activity for interest rate derivatives, credit default derivatives and foreign exchange derivatives on swap execution facilities. The Overview also provides tables showing average daily volume and total volume for the most recent month. If you have any questions or need technical assistance, please contact our help desk.

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