Cboe Global Markets Acquires Data Analytics Companies Hanweck and FT Options; Tesla’s 10,000% Options Surge Leaves Stock Gains in the Dust

Feb 4, 2020

Observations & Insight

OCC Monthly Volume by Exchange – January 2020

Lead Stories

Cboe Global Markets Acquires Data Analytics Companies Hanweck and FT Options
Cboe (press release)
Cboe Global Markets, Inc. (Cboe: CBOE), one of the world’s largest exchange holding companies, today announced it has acquired Hanweck Associates, LLC, a real-time risk analytics company based in New York, and the business of FT Providers, LLC, a portfolio management platform provider based in Chicago, commonly referred to as FT Options.

Tesla’s 10,000% Options Surge Leaves Stock Gains in the Dust
Luke Kawa – Bloomberg
What’s better than Tesla Inc.’s surge? The near 10,000% potential winnings accruing to traders who held out-of-the-money call options.
Shares in the electric-car maker have soared more than 60% in six days to top $900 for the first time. Options traders who held calls that pay out at $800 have done even better, after they jumped from 25 cents to close at $24.22 Monday. The $1,000 calls rose from 2 cents to $1.98, a surge of 9,800%.

****JB: Also see The Financial Times’ story, Tesla is nuts, when’s the crash?

OCC Cleared Contract Volume Highest January on Record
OCC, the world’s largest equity derivatives clearing organization, announced today that January 2020 total cleared contract volume was 521,727,816 contracts, the industry’s highest January ever – up 23.5 percent from January 2019, and the third highest month overall. The highest month was October 2018 with 567,833,544 cleared contracts, followed by August 2011 with 554,842,463 in cleared contract volume.

Virus Fears Are Spurring Volatility in Everything But Currencies
Sam Potter – Bloomberg
The coronavirus is offering traders and investors a lesson in just how entrenched low volatility has become in the currency market.
The rapid spread of the illness and mounting death toll has rocked other corners of the financial world in recent days, sending expected price swings across equities and bonds to the highest in months and playing havoc with raw materials.

Russia Says Coronavirus Risk May Stir Volatility in China Trade
Yuliya Fedorinova and Evgenia Pismennaya – Bloomberg
Russia said trade relations with China may be disrupted as a result of measures to fight the spread of the deadly new strain of coronavirus.
“Of course, we can’t rule out some volatility” in the flow of goods between Russia and its largest trading partner, Kremlin spokesman Dmitry Peskov told reporters on a conference call Tuesday. Even so, “we are convinced this situation won’t affect the very solid fundamentals in our bilateral relations, and the trade and economic aspect in particular.”

A Bernie Sanders Win in Iowa Could Ripple Through Markets
Emily Barrett – Bloomberg
Unlike the cookies used to lure support at the Iowa caucuses, financial-market expectations for what could be a pivotal moment in the race to the White House are only half-baked.
The state is the first to choose its preference for a nominee. So the vote could push the dollar down and stir volatility in bonds, strategists say, if the latest polls are right that votes will tip heavily in favor of Senator Bernie Sanders, a self-described democratic socialist.

****JB: I think the ghost of Joseph McCarthy is writing these articles (look at who published this, remember who is running against Sanders…just saying).

Hedge funds hold their nerve on China, seek opportunities
Samuel Shen, Ira Iosebashvili – Reuters
Hedge funds are holding their nerve on China’s ability to rebound quickly from a coronavirus outbreak that has rattled global markets, but many are also adding caveats as they try to predict the potential economic fallout.

Cboe, FXSpotStream Report Rebound in FX Institutional Volumes
Aziz Abdel-Qader – Finance Magnates
Cboe’s institutional spot FX platform on Tuesday reported its trading volumes for the month ending January 2020, which saw a positive performance as a rise in volatility encouraged more buying and selling of currencies relative to the month prior. During January 2020, Cboe FX disclosed a total trading volume of $739 billion, up 17.7 percent on a month-over-month basis from $628 billion in December 2019. In a different pattern, the figure was lower by -7.5 percent year-over-year when weighed against $799 billion in January 2019.

Sterling volume boosted by Brexit to record high; N.America turnover drops
Tommy Wilkes and Gertrude Chavez-Dreyfuss – Reuters
Tortuous Brexit negotiations helped send daily trading volumes in Britain’s pound to a record high last year, Bank of England data showed on Tuesday.
Increased activity in sterling, as well as more FX swap turnover, also sent the UK’s overall foreign exchange trading volumes to a record $2.88 trillion per day across all currencies, the BoE said in a survey of London’s FX industry, the world’s biggest. That broader figure was up 11% on 2018.

Exchanges and Clearing

Equity Trader Alert #2020 – 5 U.S. Market Holiday Reminder: President’s Day
Nasdaq U.S. equities and options markets will be closed on Monday, February 17, 2020, in observance of President’s Day.

Effective Dates of Position Limits in CBOT Treasury Futures Contracts
CME Group
The applicable position limits for CBOT Treasury futures are set forth in the Position Limit, Position Accountability and Reportable Level Table in the Interpretations & Special Notices Section of Chapter 5 (http://www.cmegroup.com/rulebook/files/position-limits-cbot.xlsx). Position limits in CBOT Treasury futures contracts are applicable during the last 10 business days of an expiring contract.

CME Group Reports January 2020 Monthly Market Statistics
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today reported its January 2020 market statistics, showing it reached average daily volume (ADV) of 18.9 million contracts during the month of January. Open interest at the end of January was 123 million contracts.

Miami International Holdings Reports January 2020 Trading Results and New Records for MIAX Exchange Group
Miami International Holdings (press release)
Miami International Holdings, Inc. (MIH) today reported the January 2020 trading results for its three fully electronic options exchanges – MIAX , MIAX PEARL and MIAX Emerald (together, the MIAX Exchange Group). The MIAX Exchange Group collectively executed over 48.5 million equity option contracts in January for a combined average daily volume (ADV) of 2,314,111 contracts, representing a total U.S. equity options market share of 10.30%.

Regulation & Enforcement

Forecasting the CFTC’s 2020 Agenda
Matthew Kulkin, Micah Green – TABB Forum
In the six months since he was sworn in as the chairman of the CFTC, Heath Tarbert has made significant changes to the agency, and he continues to chart the course for the regulator in the new year. Chairman Tarbert’s policy agenda for 2020 is extensive, but the Commission will need to move quickly to complete his priorities list. Lawyers and policy advisors in Steptoe’s Financial Services Group share their projections about the major developments expected at the CFTC this year, which undoubtedly will present derivatives market participants with risks and opportunities.


It’s Time to Make a Bigger Bet on China’s Rebound
Steven M. Sears – Barron’s
As China tries to contain the Wuhan coronavirus—which threatens to become a pandemic—investors should look past the troubles within the world’s second-largest economy and instead focus on opportunities that have been created by the Hunan Wet Market, where wild animals, and snakes, and bats, are sold for human consumption.

Here’s How to Hedge Coronavirus and Other Dangers to Your Stock Portfolio
Al Root – Barron’s
Investors worried about how badly coronavirus will hurt stocks might consider hedging their portfolio. And hedging like a pro trader these days can be as easy as buying an exchange- traded fund.
ProShares, for instance, offers “geared” ETFs. In this context, that means leverage. Financial leverage magnifies the ETF’s assets under management with complicated financial products, so that an ETF with $100 million under management, for example, could hold financial contracts worth $150, or $200 or even $300 million.
The bottom line is that gains and losses per dollar of invested money are bigger than they would be in an ETF without leverage.

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