Bitcoin’s Options Market Is Now Skewed Bullish Across All Time Frames

Oct 7, 2021

Lead Stories

Bitcoin’s Options Market Is Now Skewed Bullish Across All Time Frames
Omkar Godbole – Coindesk
Bitcoin’s options contracts used to hedge spot and futures market exposure are exhibiting bullish sentiment across all time frames in a sign of confidence in the cryptocurrency’s price rally.
The one-week and one-, three- and six-month put-call skews are hovering below zero, indicating calls – or bullish bets – are drawing higher prices than puts, which are bearish bets.

U.K. Sees More Energy Suppliers Failing in Volatile Markets
Rachel Morison – Bloomberg
Customers need protection from price swings, Kwarteng says; Volatile gas underlines need to move away from fossil fuels
More energy suppliers are likely to collapse as a result of the recent extreme volatility in gas markets, the latest sign that the crisis in the U.K. is worsening.

CMC says Sept market volatility boosts trading volumes
Online trading platform CMC Markets Plc (CMCX.L) pointed to a pick-up in client activity in September on Thursday, as the China Evergrande debt crisis and inflation concerns spurred market volatility and boosted trading volumes.
Stocks globally have retreated in recent weeks after months of recovery, due to concerns about property developer China Evergrande (3333.HK) and rising inflation, pushing the CBOE volatility index (.VIX), or Wall Street’s fear gauge, to a four-month high.

Worried About Central Banks Making a Mistake? They Already Have
Jon Sindreu – WSJ
Of all the dangers facing investors at the moment, few are scarier than the Federal Reserve making a mistake. The bad news: This mistake has already happened—the only question is how impactful it will be.

A New Standard for Interest Rate Derivatives
Someone using the then-newly minted interest rate derivatives definitions back in 2006 would only have needed to read 158 pages of the main book to get a clear picture of the terms of their trades. Anyone referencing the 2006 Definitions today would have a somewhat bigger task on their hands. To keep pace with market developments, ISDA has had to publish an extra 586 pages of amendments via nearly 90 different supplements over the past 15 years that require interleaving with the main book, making the job of keeping track of trade terms complex, time-consuming and prone to error. This is clearly not sustainable – which is why this week’s implementation of the new 2021 ISDA Interest Rate Derivatives Definitions is so important.

Markets Media Group Purchases DerivSource
Leading U.S.-based digital financial news publisher Markets Media Group (MMG) is pleased to announce the acquisition of DerivSource, the independent information source and online community for OTC derivatives professionals globally. The acquisition of London-based DerivSource, founded by Julia Schieffer, expands Markets Media Group’s rapidly growing footprint by giving it a deep expertise and network in the critical but oft-undercovered asset class of OTC derivatives, spanning trading as well as fintech, regtech and risk.

Why ‘Buying the Dip’ May Have Run Its Course
Steve Sosnick – Barron’s
“This time it’s different.” These can be the four most dangerous words that any investor can utter.
The phrase can trip up the unwary in myriad ways. “These valuations seem unsustainable,” one might contend. Don’t worry, this time it’s different. “This technology has failed every time it’s been tried before.” No problem, this time it’s different. Any of us can attempt to justify all sorts of wild schemes or nosebleed prices on the idea that they aren’t subject to the norms that have applied before.

CME Bitcoin derivative traders had ‘paper hands’ as BTC broke $55K — Report
Traders wound up their long Bitcoin derivatives contracts ahead of the October price rally, ignoring solid on-chain fundamentals.
Bitcoin (BTC) derivatives traders on the Chicago Mercantile Exchange (CME) missed out on incredible profits as BTC’s spot price smashed through $55,000 this week.
Retail investors reduced their long exposure across the Bitcoin futures and options markets in late September, according to data shared by Ecoinometrics. The amount of open short positions also climbed, indicating that derivative traders anticipated Bitcoin’s price to drop, as shown in the chart below.

Dow rallies more than 500 points as market volatility continues
Anneken Tappe, CNN Business
There’s no end in sight to the volatility on Wall Street as US stocks rallied again Thursday.
The Dow (INDU) was up around 525 points or 1.5% in midday trading, while the broader S&P 500 (SPX) rose 1.4%. The tech-heavy Nasdaq Composite (COMP) was up 1.6%. The rally isn’t just on the heels of certain stocks doing well but is much more broadly based.
Meanwhile, the yield on the 10-year US Treasury bond also rose to 1.57%.
The US equity market has been on a roller coaster of late. Investors are struggling with worries about inflation, the US debt ceiling, the Evergrande debt crisis and the general state of the recovery.


Cboe Global Markets Announces 2021 Investor Day
Cboe Global Markets, Inc.
Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, today announced that it plans to host an Investor Day on Tuesday, November 16, 2021 from 8:30 a.m. to 11:30 a.m. CT at Cboe’s global headquarters in Chicago. Ed Tilly, Chairman, President and CEO, and other members of Cboe’s senior leadership team will host presentations on the company’s operations, strategy and future growth initiatives.

Regulation & Enforcement

New Jersey-based trader admits to involvement in options trading scheme
U.S. Department of Justice
ATLANTA – Mark Melnick has pleaded guilty to a criminal information charging him with conspiracy to commit wire and securities fraud arising from a years-long scheme to manipulate the prices of short-term call options in large, publicly traded companies. Melnick is the second defendant to plead guilty for his participation in this scheme. In December 2020, Bart Ross also pleaded guilty to conspiracy to commit wire and securities fraud.

SEC freezes assets of California adviser, options firm
Ron Harrison’s clients lost money while he collected fees based on the purported gains he made by trading options, the agency charges.
Investment News
The Securities and Exchange Commission obtained an emergency court order freezing the assets of Ron Harrison, who runs Global Trading Institute in Ladera Ranch, California, along with the assets of the institute and of Harrison’s girlfriend, for allegedly carrying out an ongoing investment advisory fraud.
According to the SEC’s complaint, Harrison fraudulently charged 22 clients more than $900,000 in fees since 2016 based on the gains he made trading options in their brokerage accounts, when in fact almost all of the clients suffered substantial losses.


Energy Is Rallying. How to Play It With Options.
Steven M. Sears – Barron’s
The energy market may soon deliver a hard lesson to a world that has grown accustomed to having what it wants whenever it wants it, and almost instantaneously.
Demand seems to be exceeding supply, and that is creating imbalances in the oil and natural-gas markets. China’s energy system is teetering on the edge of crisis. In the United Kingdom, some gas stations have run out of fuel due to labor issues.

Opinion: S&P 500 chart is showing a pattern of lower highs and lower lows
Lawrence G. McMillan – MarketWatch
The S&P 500 index continues to decline, although there have been volatile days in both directions. On Wednesday, for example, it started off with a 60-point loss, only to recover 110 points from those lows with a matter of hours.
But the SPX chart shows a pattern of lower highs and lower lows (downtrend lines marked in blue on the accompanying chart), and that is the dominant feature. There are many crosscurrents and conflicts among the individual indicators, as we shall see in this report, but with the SPX chart in a downtrend, our outlook is at least short-term bearish unless that downtrend is broken.


The naked truth on naked shorting
MarketWatch (Video)
“Naked shorting”? “Failures to deliver”?
Even a cursory trip through WallStreetBets and other retail investing social media boards will yield multiple references to phrases like “failures-to-deliver” and “naked shorting” with most of those comments linked to the widely-held theory that short-selling chicanery by hedge funds and other institutional traders is the major reason that stocks like GameStop, AMC Entertainment and others remain so volatile.

Optiver Expands U.S. Footprint with Austin Tech Hub
Business Wire
Optiver, a leading global market maker, announces the opening of its Austin, Texas office, which will serve as the firm’s global tech hub. The Austin opening marks the latest development in Optiver’s continued expansion. It joins the market maker’s eight other locations spanning the US, Asia Pacific and European regions, home to 1,300+ employees and counting.
“Optiver has been active in the US markets since 1998, and in that time we have solidified ourselves as a trusted partner to exchanges across the country, making the markets healthier and more transparent for all participants,” said Optiver US CEO, Rutger Brinkhuis. “Today, the US is projected to become one of our largest growth markets, due to our focus on technical innovation, higher trade volumes, new asset classes and increased activity in single-stock equity options.”

Robinhood’s new call centers will offer suicide prevention support after a young customer’s death
Craig Harris – USA TODAY
Robinhood, an online trading platform for amateur investors, says its new around-the-clock phone support for its 22 million customers will include suicide prevention support, the company has told USA TODAY.
The move comes after Robinhood this summer disclosed in a Securities and Exchange Commission filing that it had settled a wrongful death suit with the family of Alex Kearns, a 20-year-old who traded on Robinhood and killed himself after seeing a negative account balance of $730,000 on an options trade and was unable to contact anyone at the firm to clarify what had occurred.

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