Bitcoin Options Market Eyes $4.2B Expiry on Friday; Credit Suisse Must Face Suit Over Failed Play on Fear Index

Apr 27, 2021

$40,526/$300,000 (13.5%)
Trading Technologies

Observations & Insight

The OCC and OIC announced that the Joseph W. Sullivan Achievement Award winner to be honored at the 2021 Options Industry Conference is the late Joe Levin, former Cboe vice president, research and product development, who led the development of the Cboe Volatility Index (VIX). — OCC

OCC was designated a best place for working parents in Dallas. Chicago, what do you think? — The OCC

Members Thomas Hessling, Michael Scott Arenson and Christopher McGrath were fined $40,000, $75,000 and $85,000, respectively, for pre-arranged trading in the Eurodollar options pit that involved members of the same broker group. And finally, non-member Altshuler Shaham was fined $25,000 for position limit violations in the wheat futures. —CME Group

The NYU Stern School of Business will tackle climate change in its Second Annual Volatility and Risk Institute Conference, set for Friday, April 30, from 9:00 a.m. to 3:00 p.m. ET. Speakers at the event, “A Financial Risk Framework for Climate Change: Portfolio Construction, Stress Testing, and Risk Transfer,” include an array of academics, as well as SEC Commissioner Allison Herren Lee and Acting CFTC Chairman Rostin Behnam. The conference is free on Zoom, but registration is required. You can sign up here.~SC

Lead Stories

Bitcoin Options Market Eyes $4.2B Expiry on Friday
Omkar Godbole – Coindesk
Bitcoin has begun the monthly options expiry week on a positive note, rising from $48,000 to over $54,000. Further gains may remain elusive for a while or unfold at a slower pace, as the max pain point for Friday’s $4.2 billion options expiry is $54,000. As discussed last month, call and put sellers, typically institutions with ample capital supply, often manipulate and pin the price of the underlying toward the max pain point while heading into the expiry.

Credit Suisse Must Face Suit Over Failed Play on Fear Index
Bob Van Voris – Bloomberg
Credit Suisse Group AG must face allegations that it engineered a complex fraud to sink an investment vehicle and profit on investors’ losses, after an appeals court revived the claims. The lawsuit, filed in 2018, claimed investors lost $1.8 billion in the Feb. 5, 2018, collapse of the market for VelocityShares Daily Inverse VIX Short Term Exchange Traded Notes, known as “XIV Notes,” a derivative investment that increased in value when the stock market was calm and decreased when it was volatile. Holders of the XIV notes profited inversely from changes in the Chicago Board Options Exchange’s VIX Index, a measure of expected stock market volatility that’s often called Wall Street’s “fear index.”

World’s Longest Short-Selling Ban Coming to an End in Korea
Youkyung Lee – Bloomberg
Starting next week, investors in South Korea will be able to short sell the nation’s biggest stocks as Seoul ends the world’s longest pandemic-imposed ban on the trading strategy. That’s much to the dismay of retail traders, who now dominate the local market.
On May 3, Korea is set to partially lift the ban it imposed in March last year on the key hedge fund strategy. When it does, individual traders — who have come to take up about three quarters of the market’s daily trading volumes amid the pandemic — will find a once-insurmountable trading strategy a lot easier to carry out, thanks in part to an increased number of brokerages queuing up to lend them shares.

US post-pandemic boom overcomes market fears
Eric Platt and Aziza Kasumov – Financial Times
Measures of volatility in financial markets have hit the lowest levels since the pandemic rocked stock and bond prices last year, as investors bet on tranquility and ride a wave of optimism about the US economic recovery.
The closely followed Vix index, which measures implied volatility on S&P 500 index options, earlier this month dropped below its long-term average of 20 and remained there even during a period of losses for equities last week. On Monday, the Vix ended the day at 17.64, roughly a fifth of the level seen at the most intense point of last year’s shake-out in stocks.

UBS (UBSG:SW) Takes Surprise $774 Million Hit From Archegos Meltdown
Marion Halftermeyer – Bloomberg
UBS Group AG disclosed an $861 million hit from the implosion of Archegos Capital Management and vowed to improve risk management, joining Morgan Stanley in blindsiding investors who’d been kept in the dark for weeks about the size of the losses.
The loss, mostly booked in the first quarter, overshadowed a better-than-expected profit, with strong performance in the key wealth management business. Chief Executive Officer Ralph Hamers said while the bank will require more transparency from clients to prevent such losses in the future, he defended the business with hedge funds as “strategic” and said he had no plans to follow rival Credit Suisse Group AG in cutting back lending.

Exchanges and Clearing

OCC, OIC Announce Joseph W. Sullivan Achievement Award Winner; Recipient to be Honored at the 2021 Options Industry Conference
OCC, the world’s largest equity derivatives clearing organization, today announced that The Options Industry Council will honor the late Joe Levin, former Cboe Vice President, Research and Product Development, who led the development of the Cboe Volatility Index (VIX), with the Joseph W. Sullivan Options Industry Achievement Award. The award will be presented virtually at the 2021 Options Industry Conference on April 28.

*****JJL: Can’t wait to hear more at the conference.

ICE to launch ultra-low latency wireless market data services in Europe; The wireless market data services from ICE will provide competitive latency to the London metro area and Frankfurt.
Wesley Bray – The Trade
Intercontinental Exchange (ICE) has confirmed plans to launch an ultra-low latency wireless market data offering in the London metro area and Frankfurt through ICE Global Network (IGN). The wireless market data service will enable clients to access both cash and derivatives packages in the London triangle from ICE Futures, Euronext, Cboe Europe and London Stock Exchange, as well as Eurex and Xetra from Frankfurt.

BIDS Trading May Grow Beyond U.S. Equities
Shanny Basar – Traders Magazine
BIDS Trading, which operates the largest block-trading alternative trading system by volume in the US, could begin to trade other asset classes in addition to expanding its core US equities business and growing internationally. Bryan Harkins, president of BIDS Trading, told Markets Media: “We could become a multi-asset class in parallel with expanding the core US equities business and expanding internationally. Fixed income is going through a massive transformation and my skill set includes improving workflows for electronic trading and that is something that we are going to look at.” Cboe Global Markets completed its acquisition of BIDS Trading on December 31 last year. The exchange group maintains BIDS as an independently managed and operated trading venue and broker/dealer, separate from and not integrated with the Cboe US securities exchanges.

Regulation & Enforcement

Credit Suisse must face lawsuit over U.S. ‘volatility’ crash
Jonathan Stempel – Reuters
A U.S. appeals court on Tuesday revived a lawsuit accusing Credit Suisse Group AG (CSGN.S) of causing huge losses by defrauding investors in a complex product for betting on stock market swings that lost 96% of its value in a single day.


Itiviti wins Best OEMS at 2021 Markets Choice Awards
Itiviti, a leading trading technology and service provider to financial institutions worldwide, today announced that it has won Best Order and Execution Management System (OEMS) from the prestigious 2021 Markets Choice Awards. Organized by Markets Media Group, The Markets Choice Awards recognize the best of the best in capital markets trading and technology. Terry Flanagan, Managing Editor of Markets Media Group, said: “Itiviti has demonstrated a commitment to and delivery of exceptional OEMS functionality and innovative product development during the past 12 months. The firm has proved its ability to stay ahead in the highly competitive and technology-driven segment. We congratulate Itiviti on winning the ‘Best OEMS’ award and look forward to continued innovation in years to come.”
/ Launches Investing Discovery and Competitive Intelligence Trading Platform
Traders Magazine (press release), (vigtec) a new consumer-focused investing discovery platform, emerged from Beta today, offering among the fastest real-time market data flows available, and determined to deliver affordable investing resources for all. The platform, accessible for free online and via the iOS App Store, provides a forum for advanced traders to offer custom alerts, algorithms, market indicators, and content channels on a subscription basis, effectively creating a Roblox-like Marketplace as a Service (MaaS) environment. vigtec also brings a powerful research and investor education platform for the casual investor to expand their knowledge base and raise their game. vigtec groups users into three categories: Explorers, Investors, and Traders.


Learning the Greeks: An Expert’s Perspective
Options trading can be complex. Add in unfamiliar letters, and the novice trader may feel overwhelmed before getting started. If this sounds like you, be sure to join the Cboe Options Institute and options expert Sheldon Natenberg on Wednesday, May 12.
Time: 12:00 p.m. ET.

Fundamentals of Futures & Options (also applicable to Series 3 Exam)
For more than 30 years, IFM has consistently provided learners with a solid foundation and understanding of futures and options markets and trading including terminology, risk management, pricing, and basic trade strategies. This instructor-led virtual course includes lectures from an engaging instructor with real-world expertise and supported by class discussion, practice exercises and educational materials. The course fee includes two must-read industry books, “Futures and Options” and the “Guide to U.S. Futures Regulation.”
Dates: May 10, 2021 through May 14, 2021, 12:00 p.m. to 2:00 p.m.
Location: Virtual Live. 2-hour sessions over 5 days.
Early-bird $495
Fee $595
Instructor: Marti Tirinnanzi
Class size registration is limited to approximately 20 participants to promote student participation and interaction.

The Covered Call Options Strategy
Date: Wednesday, May 12, 2021
Time: 3:30 p.m. CT
Duration: 1 hour
Mark Benzaquen – Principal, Investor Education – OCC
For options investors, the covered call is one of the core strategies for income generation, but there are many details to consider before opening a position. On May 12, join The Options Industry Council’s Mark Benzaquen, a former pit broker who now focuses on options education, for a detailed overview of the covered call.

Tenor, Theta, & Use of Weekly Index Options
Cboe Options Institute
This 60-minute webinar explores tenor, theta, and use of weekly index options.
Continuing education (CE) credit available – This webcast is accepted for one hour of CFP, CIPM, RMA, CIMC, CIMA, or CPWA CE Credit for webcast attendees. CFA Institute members may self-document their continuing professional development activities in their online CE tracker.
Date: Wednesday, April 28, 2021
Start Time:12:00 p.m. EST
Duration: 60 minutes


Clearing 101: Exchanges, Clearinghouses and CCPs
Dates: Sep. 15, 2021 12:00 p.m. – Sep. 16, 2021 1:30 p.m.
Location Virtual Live. Two 90-sessions over 2 days.
Early-bird $199
Fee $225
Instructor: Marti Tirinnanzi
Registration is limited to approximately 20 participants to promote student participation and interaction.
Join us for a short program (90 minutes each day for 2 days) that explains the multilateral systems that provide the infrastructure for transferring, clearing and settling payments, derivatives and other financial transactions among financial institutions and end users. Following Dodd Frank, clearinghouses became designated as Systemically Important Financial Market Utilities, vital to the operations of the financial markets and subject to heightened regulatory scrutiny. Buyers and sellers in exchange transactions rely on clearinghouses to intermediate transactions and to manage credit risks between trading parties. As such, clearinghouses promote transparency, efficiency, and stability by providing market-based pricing, daily settlement, and ensuring adequate capitalization for markets to function.

Q1 2021 ETD Volume
May 5, 2021; 10:00 a.m. to 11 a.m. ET
The webinar will highlight the main trends in trading activity in Q1 2021 in the global exchange-traded derivatives markets, with category and regional breakdowns as well as exchange and contract rankings. The webinar also will feature two guest speakers from UBS discussing the rise of retail participation in the U.S. ETD markets.

A New Virtual Experience
The Options Industry Conference is Going Virtual in 2021. Join OCC and the options exchanges for the 39th annual Options Industry Conference, April 28-29, 2021. While the conference will be held virtually for the first time in its history, the focus will continue to be the key topics facing the options industry today, from the regulatory shifts in the U.S. and Europe to the technological developments that are driving monumental change in markets around the globe.

John Lothian Newsletter

We visit more than 100 websites daily for financial news (Would YOU do that?)

“John Lothian and Company… our industry intelligence.”

Rick Lane

CEO, Trading Technologies

Past Options Newsletters

Pin It on Pinterest

Share This Story