Big VIX Call Options Trade Suggests Re-Emergence of ‘50 Cent’; Options Traders Eye Insurance Even as Stocks Soar

Dec 18, 2019

Lead Stories

Big VIX Call Options Trade Suggests Re-Emergence of ’50 Cent’
Gregory Calderone – Bloomberg
An outsize CBOE Volatility Index options trade could signal the return of “50 Cent,” an investor who earned the moniker for a proclivity to buy cheap options in large amounts.
Someone snapped up roughly 130,000 January $22 calls on the index for about 50 cents each Tuesday, contracts that would pay off if the volatility gauge almost doubles from its current level. The trade came as the S&P 500 Index climbed toward a record for the fourth session in a row and the VIX, which tracks the 30-day implied volatility for stocks in the benchmark gauge, hovered near its lowest level of the year.

Options Traders Eye Insurance Even as Stocks Soar
Gunjan Banerji – WSJ
Options traders are paying up for bets that would profit if the S&P 500’s record run came to a halt.
Renewed optimism about the domestic economy and a preliminary trade pact between the U.S. and China have breathed fresh life into the stock market. The S&P 500 has surged 27% this year, on track for its best annual performance in six years.

Equities Hit Records but Volatility Speaks Volumes
Jan-Patrick Barnert and Michael Msika – Bloomberg
Want something to moan about now that European stocks have finally hit record highs? Trading volumes might be a good place to look. In the biggest rally for European equities since the aftermath of the financial crisis, the cash value traded on the Stoxx 600 index is down about 13% compared to last year, and figures from the region’s biggest exchanges aren’t encouraging either.

New York Fed chief says efforts to restore calm to financial markets is working
Greg Robb – MarketWatch
The U.S. central bank’s efforts to restore calm to financial markets in the aftermath of a sudden spike in short-term borrowing costs in mid-September has proven to be successful, said New York Fed President John Williams on Wednesday.
“We are seeing money markets operate very smoothly,” Williams said, in an interview on CNBC.
Williams said he expected typical year-end pressures on interest rates over the next two weeks, but said the Fed was prepared and in a good position.

Exchanges and Clearing

ESG derivatives surpass half a million contracts at Eurex; Eurex has launched ESG futures and options in Europe this year to help market participants manage challenges around sustainable investing.
Hayley McDowell – The Trade
Environmental social government (ESG) derivatives reached half a million traded contracts on 12 December at Eurex, as the exchange says it may introduce further products next year.


Employee Spotlight: From Touch-Tone Broking to Complex Order Books
Matrix Execution Technologies blog
For 20-plus years Jordan Naylor has been intimately acquainted with derivatives, particularly options. From trading odd lots as an 18-year-old to building the software that supports an array of market participants’ derivatives trading, Jordan’s career thus far has moved in lockstep with the drastic evolution of markets in the 21st century. Now, Jordan is the President and Chief Technology Officer of Matrix Execution Technologies. To get a sense of his perspective on the options industry and what drives him professionally, we asked Jordan to share some of his insight regarding the options trading community.


Investing Insider December 18: 2020 stock-picking advice from top managers
Joe Ciolli – Business Insider
We interviewed the seven top-ranked large-cap investors to learn what they did that allowed them to stand apart from the thundering herd. They were even kind enough to share the top themes they’re watching for 2020, and which stocks they’re buying to match them.

Beware of equity ‘over-exuberance’ in coming months, warns Citi
Barbara Kollmeyer – MarketWatch
Not a creature was stirring.
Less than a week from Christmas and investors appear unwilling to push stocks too far one way or another. All three major indexes managed fresh records on Tuesday, but by slim margins, with the S&P 500 finishing 0.03% higher.


The S&P 500 is within striking distance of its best year since 1997
Chris Matthews – MarketWatch
U.S. stocks continue to notch record highs in the wake of a limited U.S.-China trade deal announced last week and as economic data from job gains to housing starts suggest that the American economy is holding up nicely in the fourth quarter of 2019. In fact, the S&P 500 index SPX, is having such a great run that it has an outside chance of surpassing its 2013 performance, and notching its best calendar-year gains since 1997.

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