Bullish options bets by retail investors are on the decline, hitting their lowest level this year as market sell-off spooks day traders

Oct 6, 2021

Lead Stories

Bullish options bets by retail investors are on the decline, hitting their lowest level this year as market sell-off spooks day traders
Ethan Wu – Markets Insider
Retail investors are shying away from bullish options bets as choppy markets increasingly mean buying the dip doesn’t always pay off, according to a Bloomberg report.
As the effects of pandemic-era stimulus fade from markets, retail investors have soured on high-risk, high-reward options contracts. Among traders buying small contracts, only 43% of options volume went to bullish bets in late September, according to a Susquehanna analysis cited by Bloomberg. That’s the lowest level in 2021.

S&P 500 (SPX) Hasn’t Been This Volatile Since Early in the Pandemic
Lu Wang – Bloomberg
Pick a direction, and don’t go with it.
That’s the story in stocks of late, with the S&P 500 alternating between gains and losses of at least 1% for four straight sessions — the longest stretch since June 2020. It’s the same in fixed income, with 10-year Treasury yields swinging wildly around 1.5%.

Debt-Ceiling Impasse Poses ‘Tail Risk’ Market Event, Barclays Says
Emily Graffeo and Lu Wang – Bloomberg
While options markets seem unbothered by the ongoing debt ceiling drama, Barclays Plc is warning investors to be prepared.
In a recent note to clients, strategists including Maneesh S. Deshpande wrote that a debt ceiling impasse could be a tail risk event for equity markets, and said that the chance of a U.S default is now “greater than at any point over the past decade.”

Morgan Stanley’s Mike Wilson Warns of Fresh Stock-Market Pain
Justina Lee and Cecile Gutscher – Bloomberg
A little more than two weeks ago, Morgan Stanley’s Mike Wilson warned a 20% plunge in U.S. stocks was a real possibility. Since then, the S&P 500 has weathered bouts of volatility to remain near all-time highs.
Now, skeptics like Wilson can find a more receptive audience as the bond selloff gathers pace and stocks fall in Wednesday trading on a growing supply-side crisis around the world.

Leveraged ETFs Lured $1.5 Billion on Day Gensler Flagged Risks
Sam Potter – Bloomberg
The very day Gary Gensler signaled new rules to tame the risky world of leveraged ETFs, investors piled into the complex products at a historic rate.
More than $1.5 billion was poured into four of the most amped-up exchange-traded funds in the U.S. on Monday, according to data compiled by Bloomberg released overnight. The outsize allocation came just as the Securities and Exchange Commission Chair warned the derivatives-powered investing style is not suitable for everyone.

****JB: Also see Business Insider article, Popular leveraged funds could burn retail investors and shock the wider financial system, Gary Gensler says and the Financial Times article, US regulator warns leveraged ETPs pose systemic risk to markets.

Stocks will be volatile until they can prove their inflation resilience, these strategists say
Steve Goldstein – MarketWatch
It wasn’t that long ago — OK, yesterday — when U.S. stocks gathered strength, with the battered Nasdaq Composite registering its largest one-day jump since late August.
Ah well, back to misery. Stock futures are down, yields are rising, and over in Europe, natural-gas prices are going absolutely insane.

Pound (GBP) Weakens: A Wave of Bets Against Sterling Is Starting to Build
William Shaw and Vassilis Karamanis – Bloomberg
A supply chain crisis, sky-rocketing energy prices, inflation expectations at historic highs. It’s easy to see why the case against U.K. is catching on.


Cboe Global Markets Reports September 2021 Trading Volume
Cboe – PRNewswire
Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, today reported September monthly trading volume statistics and projected rate per contract/net revenue capture for the third quarter of 2021 across its global business lines.
The data sheet “Cboe Global Markets Monthly Volume & RPC/Net Revenue Capture Report” contains an overview of certain September trading statistics and market share by business segment, volume in select index products, and full quarter RPC/net capture across business lines.

Miami International Holdings Reports September 2021 Trading Results, MIAX Pearl Equities Sets New Market Share and Volume Records; SPIKES Futures Volume at Record Levels
Miami International Holdings, Inc. today reported September 2021 trading results for its U.S. exchange subsidiaries – MIAX , MIAX Pearl and MIAX Emerald (together, the MIAX Exchange Group™) and the Minneapolis Grain Exchange (MGEX). The total U.S. multi-listed options market share of 14.50% in September 2021 was 79 basis points higher than the 13.71% market share in September 2020 and represented a 5.8% increase.
The MIAX Exchange Group collectively executed 110.8 million multi-listed options contracts in September 2021, representing an average daily volume (ADV) of 5,275,356 contracts.

Monday and Wednesday Weekly Expirations for IWM Options
OCTOBER 06, 2021 11:33:09 AM
MIAX Options, MIAX Pearl Options and MIAX Emerald have expanded the Short Term Option Series Program to list options on the iShares Russell 2000 (IWM) ETF which expire on Mondays and Wednesdays.

NYSE Pillar Options Migration: October 16th Testing Opportunity, Updates to System Specifications
On Saturday, October 16th, NYSE Arca Options will offer its second end-to-end Production testing opportunity in preparation for the migration to NYSE Pillar. To secure connectivity, Exchange Participants that do not have NYSE Pillar sessions in Production must complete certification with TMS (tms@nyse.com) and register with Connectivity (connectivity@nyse.com) by Wednesday, October 13th. A copy of the test script will be provided upon registration and can also be found here. Please note that CAT submission will no longer be included as part of this test.

Regulation & Enforcement

SEC Considers Crackdown on Complex ETFs
Evie Liu – Barron’s
The Securities and Exchange Commission will consider tougher rules for “complex” exchange-traded products – – such as leveraged and inverse funds – – that might pose risks to retail investors and the broader financial market, SEC Chair Gary Gensler said in a statement.


Cboe expands data and access solutions team with senior appointments; New hires include an industry expert from S&P Dow Jones Indices as well as internal promotions.
Wesley Bray – The Trade
Cboe has expanded its data and access solutions leadership team as it looks to continue its global growth with internal promotions and external hires. Financial services industry expert Bo Chung joins Cboe as senior vice president, global sales and index licensing. In this new role, Chung will oversee the strategic growth and adoption of Cboe’s holistic data access solutions offering.

Cboe Appoints Bo Chung to Senior Vice President, Global Sales and Index Licensing, Expanding Data and Access Solutions Leadership Team
Bo Chung joins Cboe as Senior Vice President, Global Sales and Index Licensing
Michael Hollingsworth promoted to Vice President, Global Head of Data and Analytics
Geralyn Endo promoted to Vice President, Global Data and Access Solutions Client Engagement
Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, today announced that it has expanded its Data and Access Solutions leadership team to successfully position the business for further global growth.


Traders phone up gambling helplines as game-like broker apps spread
Madison Darbyshire – Financial Times
Helplines of gambling addiction recovery groups have been ringing with a new kind of caller: day traders.
The rise of mobile brokerage applications outfitted with prompts, animations, rewards and digital flourishes have brought the feel of investing platforms closer to online sports betting and gambling.


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