Bitcoin options traders anticipate short-term price correction, analysts say

May 16, 2024

Observations & Insight

Cboe’s Adam Inzirillo talks about Cboe’s data offerings and growth at FIA Boca
JohnLothianNews.com

Adam Inzirillo, the head of data and access solutions at Cboe, spoke to JLN at the FIA International Futures Industry Conference in Boca Raton, FL in March about his experience with electronic trading products before joining Cboe, the lessons he learned in his first months on the job, and the breadth of services Cboe is offering these days. Inzirillo talked with John Lothian News as part of the JLN Industry Leader video series sponsored by Wedbush.

Watch the video »

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Volatility Insight of the Week: Corn skew, as measured by CME Group’s Corn volatility index, is nearing a 9-month high, which suggests options traders are more heavily positioning for upside risk. To learn more about CVOL, please visit HERE.

Lead Stories

Bitcoin options traders anticipate short-term price correction, analysts say
Brian McGleenon – The Block
Despite yesterday’s softer U.S. CPI inflation report, investors are still ready to pay a premium for short-term downside protection, according to CF Benchmarks’ analysis of Chicago Mercantile Exchange (CME) options on bitcoin futures.
The CF Benchmark analysts said that although bitcoin saw a breakout above the $66,000 mark after yesterday’s softer inflation print, there is still “higher implied volatility for OTM puts compared to calls.”
/jlne.ws/3V3h3UJ

GameStop and AMC Extend Slump as Meme-Fueled Rally Unravels; Both stocks are heading for second straight day of declines; Volatility recalls 2021 heyday of raucous meme stock gains
Bre Bradham and Subrat Patnaik – Bloomberg
GameStop Corp. and AMC Entertainment Holdings Inc. are slumping for a second day, as the meme-stock frenzy that gripped markets earlier this week fades.
GameStop fell as much as 20% Thursday, and AMC was down by 12%. Meme traders had bid up the stocks for the first two days of the week, before the momentum faltered on Wednesday and the ensuing tumbles erased a large swath of the $11 billion of market value they’d gained.
/jlne.ws/3WDp6ZA

US copper prices soar to record high as funds pile in; Short sellers cover negative bets as gap between US and UK prices hits largest on record
Harry Dempsey – Financial Times
US copper prices have blown out to a record premium over the global benchmark in London, as speculative funds pile in and traders are forced to cover short bets on the world’s most important industrial metal. Copper futures traded in New York surged to an all-time high, with the most active three-month contract to July rallying 11 per cent in the past week to a peak of more than $5 per pound on Wednesday.
/jlne.ws/3K4oKn7

Millennium, Point72 and Citadel Are Among Buyers of Bitcoin ETFs; Retail owns most of the float but money managers have waded in
Isabelle Lee – Bloomberg
When it comes to Bitcoin ETFs, it’s not just the retail trading crowd that’s taking the plunge. It’s now clear that hedge funds, pension funds and banks have also sprinkled capital into the exchange-traded funds after their blockbuster debut that was more than a decade in the making.
Among the most well-known buyers that have emerged are hedge funds like Millennium Management, which held around $2 billion worth of shares in at least four Bitcoin ETFs, as well as Steven Cohen’s Point72 Asset Management, Elliott Investment Management and Citadel Advisors.
/jlne.ws/3QJ3eIf

Exchanges

OCC Publishes 2023 Annual Report: Celebrating 50 Years 
OCC
On behalf of our colleagues, Management Committee and Board of Directors, we are pleased to share our 2023 Annual Report. Inside you’ll revisit key milestones from OCC’s first 50 years and see our values driven culture that enables us to fulfill our duties as a Systemically Important Financial Market Utility. Inside Our Culture is a new section this year that explains our four refreshed values and the intentionality behind them.
OCC cleared a record 11.1 billion options contracts in 2023 while continuing to develop our new platform Ovation, which will help address today’s market needs while laying the groundwork for innovation. Delivering innovative solutions to meet industry needs is a staple of OCC’s history and continues to be demonstrated through our ongoing technology transformation, Renaissance. This new technology will create an expedited onboarding process and enriched data access that will enhance the user experience.
/jlne.ws/3UKi6aD

Futures exchange CME plans to launch bitcoin trading; US group has held discussions with market participants over Switzerland-based market
Philip Stafford – Financial Times
CME Group, the world’s largest futures exchange, is planning to launch bitcoin trading, aiming to capitalise on surging demand this year among Wall Street money managers to gain exposure to the cryptocurrency sector.
The Chicago-based group has been holding discussions with traders who want to buy and sell the cryptocurrency on a regulated marketplace, according to three people with direct knowledge of the talks.
/jlne.ws/3UGnlZ3

Cboe Global Markets Announces 2024 Annual Meeting Results
Cboe
Cboe Global Markets, Inc. (Cboe: CBOE), the world’s leading derivatives and securities exchange network, today announced the preliminary shareholder voting results from its 2024 Annual Meeting held today.
/jlne.ws/3UJ0P1E

Regulation & Enforcement

FIA backs international effort to promote “effective practices” for variation margin
FIA
FIA has responded to a discussion paper released by international standard setters that sets out eight “effective practices” for streamlining variation margin in centrally cleared markets. The discussion paper addresses the need for greater transparency and understanding of margin practices at central counterparties, particularly in light of recent episodes of market volatility triggered by the COVID crisis and Russia’s invasion of Ukraine.
/jlne.ws/4boOjLN

Kalshi CEO on CFTC Event Contracts Crackdown
Bloomberg Crypto Show (Video)
Last week the CFTC took a major step toward trying to ban derivatives for being used to bet on political contests and sports games. Kalshi, the first CFTC-regulated event contracts exchange, recently signed an agreement with Susquehanna International Group, to open a trading desk for its contracts. Kalshi Co-Founder and CEO Tarek Mansour joins Sonali Basak and Matt Miller to discuss.
/jlne.ws/3UKuaJ9

Technology

Conscious usage of TCA: Making trade analytics more actionable; With data becoming unavoidably vital to the trading desk, Wesley Bray explores how traders are delving past traditional TCA and collaborating with data scientists on the desk to help gain a deeper understanding of market dynamics, in order to make better informed trading decisions.
Wesley Bray – The Trade
In the constantly evolving financial markets landscape, where volatility and complexity are continually featured, the ability to discern the true costs of trading has become paramount for investors and institutions alike. If used correctly, transaction cost analysis (TCA) can provide valuable insights in this environment, providing a comprehensive framework to dissect and understand the intricacies of trade execution.
/jlne.ws/3QM4Il8

Strategy

VIX Lows
Cboe
In #Vol411, Scott Bauer @cboesib has your options trading updates as the market reaches all-time highs.
/jlne.ws/3QP5yxt

Miscellaneous

GameStop and AMC shares were halted 38 times on Tuesday. This expert has been arguing for decades that halts don’t work.
Steve Goldstein – MarketWatch
GameStop GME and AMC Entertainment AMC were halted for trading 38 times on Tuesday. One might wonder what good those halts accomplished.
Charles M.C. Lee, professor emeritus at the Stanford Graduate School of Business, has been questioning the wisdom of trading halts for some time. In 1994, he co-authored a paper arguing that trading halts actually increase volume and volatility.
/jlne.ws/4apJNeA

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