Observations & Insight
MR: This will be the last JLN Options Newsletter for 2019. We will resume publishing in January 2020. Happy Holidays!
Out With the Old…
This week on The Spread, as we say goodbye to the 2010s, we take a look at a few changes coming ’round the bend.
Bitcoin Options Introduction Subdued in Wake of Futures Letdown
Olga Kharif – Bloomberg
Bitcoin advocates are taking a more measured approach over the introduction of options for the world’s largest cryptocurrency after the wild ride they took with futures.
While the contracts that provide the right, but not the obligation, to buy or sell a specified amount of coins within a set time period have been available on some online exchanges, they’re heading for the mainstream, just as futures did during the height of the crypto mania in 2017.
Stocks and Bonds Haven’t Rallied Like This Since 1998
Gunjan Banerji – WSJ
Stocks and bonds are staging an extraordinary run, on track for their biggest simultaneous gains in more than two decades.
Heading into the final two weeks of 2019, the S&P 500 has soared 28.5%, while a bond rally has pushed the yield on the benchmark 10-year Treasury note down more than three quarters of a percentage point.
Exchanges and Clearing
Cboe responds to speed bump comments
Dear Ms. Countryman:
Cboe EDGA Exchange, Inc. (“EDGA” or the “Exchange”) appreciates the opportunity to respond to comments submitted to the Securities and Exchange Commission (“Commission”) on the above-referenced proposed rule change (the “Proposal”).1 The Proposal was filed on June 7, 2019 to introduce a delay mechanism on EDGA that is designed to protect liquidity providers, and thereby enable those liquidity providers to make better markets in equity securities traded on the Exchange. On August 22, 2019, the Exchange filed its initial response letter, addressing a number of comments received on the Proposal, and explaining the potential for the proposed Liquidity Provider Protection (“LP2”) to reduce adverse selection risks for liquidity providers, and benefit the market through improvements to market quality.2 On September 24, 2019, the Commission instituted proceedings to determine whether to approve or disapprove the Proposal (“Order Instituting Proceedings”),3 and a number of additional comments have subsequently been filed by industry participants. The Exchange continues to believe that the Proposal would encourage fair, orderly, and efficient markets that benefit investors, including both liquidity providers and market participants that access liquidity on EDGA. This comment letter responds to comments filed after the Initial Response Letter and the Order Instituting Proceedings.
WEX Provides Complex Options Tech on Montreal Exchange
John D’Antona – Traders Magazine
The Montréal Exchange is partnering with Wolverine Trading Technologies, LLC, a leading provider of premier execution technology, to provide Canadian Options Traders with access to enhanced complex order execution.
How to Not Lose Money Trading Options
Tim Garlick – Traders Magazine
“This one time, at band camp…” Everyone knows that you do embarrassing things at “band camp” so the analogy seems fitting. A long time ago, I did something really dumb with my options trading, and I lost a significant amount of money because of it. In this article, I am going to share with you my story along with the lessons to be learned so that you can avoid unnecessary pain and loss in your own trading. The article includes real numbers and calculations because you have to be able to understand and calculate your costs and gains if you want to be a successful options trader. After the wonky stuff, I include some advice for how to avoid making the type of mistake that I did, as well as some advice on how to approach mistakes that inevitably happen anyway.
Disruptive decade: Ten things the teen years brought world markets
Sujata Rao, Dhara Ranasinghe, Tommy Wilkes, Saikat Chatterjee, Elizabeth Howcroft, Tom Wilson, Julien Ponthus, Joice Alvarez and Thyagaraju Adinarayan – Reuters
The 21st century’s teen years, bookended by a financial crisis at the start and the fintech revolution at the end, were a decade of disruption. From negative borrowing costs to bitcoin, here are ten trends that have upended traditional economic and investment models in the past decade:
The Lives We Lost in 2019
Steven Gittelson – Bloomberg
Former Federal Reserve Chairman Paul Volcker, Vanguard Group founder John Bogle, auto visionary Lee Iacocca, corporate raider T. Boone Pickens and former French President Jacques Chirac were among newsmakers in finance, business and government who died in 2019.
The business world lost H. Ross Perot, a billionaire who twice ran for U.S. president; David Koch, industrialist and libertarian who tried to reshape the U.S. political landscape; Herb Kelleher, who co-founded trend-setter Southwest Airlines; and Mark Hurd, co-chief executive officer at Oracle Corp.