Bitcoin Options Show Traders Setting Sights on New Record High

Feb 13, 2024

Observations & Insight

Are you ready? There are 113 days until the T+1 rule changes that will shorten the settlement cycle from T+2 to T+1. The change will apply to all U.S. securities transactions that settle through DTC, including transactions in US cash equities, corporate debt, and unit investment trusts. Canada has implemented a similar rule for its markets. However, due to the three-day Memorial Day holiday in the United States, Canadian securities will transition to a T+1 settlement date on May 27th, a day ahead of U.S. securities. ~JJL

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Lead Stories

Bitcoin Options Show Traders Setting Sights on New Record High
David Pan – Bloomberg
The options market is showing that crypto traders are targeting what would be a new record price for Bitcoin after the largest cryptocurrency reached a more than two-year high of $50,000 this week.
The open interest, or number of outstanding contracts, for calls that expire on March 29 with strike prices of $60,000, $65,000 and $75,000 has seen a significant increase, according to data from the largest crypto options exchange Deribit. Bitcoin’s all-time price of almost $69,000 was set in November 2021.
/jlne.ws/3UFztuT

Retail Traders Are Losing Billions in India’s Booming Options Market
Akshay Chinchalkar, Chiranjivi Chakraborty and Ashutosh Joshi – Bloomberg Markets
Like a movie star at a premiere, Mohammad Nasiruddin Ansari steps out of the back seat of a white Mercedes. Flanked by a phalanx of black-clad bodyguards, he strides into the lobby of a luxury hotel and takes center stage in a ballroom as indoor fireworks machines spew fountains of sparks. “If you don’t make money in three months, I will give you 2 million rupees [$24,000],” he declares to cheers from the adoring crowd in a scene that’s still playing on YouTube. Ansari is meeting his fans in Pune, about 90 miles south of Mumbai. He’s selling the dream of stock market riches to India’s fast-growing cadre of small investors. With half a million social media followers, he’s pushing an especially risky strategy: trading stock options, often as all-or-nothing bets on future share prices.
/jlne.ws/49zMryo

Bitcoin Traders Scoop Up Options Bets at $65K and Higher; The bullish flow is reminiscent of the 2020-2021 bull market when traders consistently snapped up bitcoin calls at levels well above the going market rate.
Omkar Godbole – CoinDesk
Move over fears of a bitcoin (BTC) price drop due to so-called overbought technical conditions and potential selling by bankrupt crypto lender Genesis.
Crypto traders are snapping cheap out-of-the-money (OTM) bitcoin calls or bullish options bets at levels around the cryptocurrency’s lifetime high of $69,000.
/jlne.ws/3wfOlWJ

Investors pay higher hedge fund fees for first time in a decade; Demand has been growing for multi-manager firms that charge more
Costas Mourselas – Financial Times
Investor eagerness to allocate more money to the hedge fund industry’s costly mega-managers has driven up average fees for the first time in a decade. Management and performance fees fell every year between 2014 and 2023, according to a survey by BNP Paribas of 238 hedge fund investors, except for 2020 and 2021 when the French bank did not record the data, as investors pulled money from the industry following often-lacklustre returns.
/jlne.ws/3HY4Mtq

Hedge funds buy stocks amid ‘almost no panic’ market, says Goldman
Carolina Mandl – Reuters via Yahoo Finance
Global hedge funds bought more stocks than they sold for the second consecutive week, mainly in the so-called cyclical sectors, such as energy, industrials and materials, amid an “almost no panic” market, according to a Goldman Sachs report.
/jlne.ws/4bPtQAD

Regulation & Enforcement

FIA Gives Remarks on Bank Capital Proposals at CFTC Meeting; Wide range of end-users and financial market utilities voice concerns
On 13 February, FIA will provide remarks to the Commodity Futures Trading Commission’s Energy and Environmental Markets Advisory Committee highlighting the impact that pending US bank capital proposals will have on the cleared derivatives markets.
Jackie Mesa, FIA’s Chief Operating Officer & Senior Vice President of Global Policy, will emphasize that the pending US bank capital proposals will significantly increase the capital requirements for banks that offer client clearing services to customers, including energy, agriculture, and other end-user firms that seek to manage commercial risk.
/jlne.ws/3wjZxSk

Technology

Transformation of financial markets
Eurex
The coming wave of technological change through artificial intelligence, big data and blockchain technology is set to fundamentally change derivatives markets. Eurex spoke with Helen Hartwell, Head of Exchange Traded Derivatives Client Consulting at UBS Investment Bank, about how digitalization is driving an evolution in the marketplace, front-to-back. Where is disruption coming from in listed derivatives markets?
/jlne.ws/42TSPi9

Tradefeedr, LSEG FX, Plan Data Partnership
Colin Lambert – The FullFX
Tradefeedr and LSEG FX has unveiled plans for a “strategic partnership” to integrate Tradefeedr’s data APIs within the LSEG FX’ FXall platform and its workflow tool Workspace. The firms say the partnership will enable “a new standard” for automated FX trading by linking decision-making and execution workflows and facilitating data-driven dialogue between sell-side liquidity providers and the asset managers, hedge funds and corporates that transact over LSEG’s network.
/jlne.ws/3SBMKlp

Strategy

Big Oil Is the Magnificent Seven’s Hedge-in-Waiting
Liam Denning – Bloomberg (Opinion)
May 17, 1995, a Wednesday, was a historic day for energy stocks. Not that they acted that way: Like the oil price — about $20 a barrel — they were flat. The action was elsewhere: Technology stocks overtook the energy sector’s weighting in the S&P 500 for the first time that day. Bloomberg News noted the Nasdaq’s rise versus the Dow’s drop, sparked by a big earnings beat from chip-equipment maker Applied Materials Inc. Netscape Communications Corp.’s stock-market debut, the internet’s coming-out party, was only a month away.
/jlne.ws/49C3wIf

Trading OTM in 0 DTE
Tastylive (Video)
It’s not always easy to take the measure of a market, whether you’ve been trading for a day or a decade. On this segment we look under the hood—options probabilities, volatility, trading strategies, futures, you name it—so your trading mechanics are built to manage more winners.
/jlne.ws/3UH0Q80

Red Hot Inflation
Cboe (Videos)
In #Vol411, Tim Biggam @Delta_Desk covers the $VIX Index put/call ratio so far today, contango in the #VIX futures term structure and more.
/jlne.ws/42AR6xX

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