Observations & Insight
Barchart Survey Provides Customer Insights
By Thom Thompson – John Lothian News
Barchart published its futures market survey What Drives Futures Market Participants Tuesday. The report resulted from a survey of more than 400 people, from the general online population to active investors, listed derivatives audience members and business professionals. The report provides insights into the current attitudes of traders, and a few non-traders, toward futures markets. The survey drew from responses from four distinct audiences: Facebook, LinkedIn, Barchart.com, and the John Lothian Newsletter (yes, maybe even you, dear Reader!). The Facebook crowd represents the general online population.
As the report says on its first page, “These cohorts allowed us to understand how each group interacts with the futures markets, on which platforms, and for what purposes.” The folks at Barchart do not make any claim about the statistical reliability of the results. That is a good thing, since more than one in ten of the Facebook respondents said that they trade futures – certainly not representative of the Facebook-user base.
The respondents’ accounts are pretty well funded. Thirty-six percent said they have more than $100,000 in their futures accounts.
To read the rest of this commentary, go HERE.
MR: Hot off the presses – or whatever the Internet equivalent of that is – Cboe is planning on re-launching mini VIX Futures (VXM futures), which are smaller versions of VIX Futures (hence ‘mini’) with a $100 contract multiplier. Cboe previously offered these between 2009 and 2014; according to a Cboe representative, they’re re-launching this product because of the success of other mini and micro futures products in the market, hoping that they’ll be able to attract a broader swathe of market participants to using the new VIX product. You can find Cboe’s regulatory filing for the re-launch of its VXM futures in our “Regulation” section.
CME Group to reopen Eurodollar options trading floor in August; The Eurodollar options trading floor at CME Group in Chicago is scheduled to reopen on 10 August, and traders will be required to sign a waiver before access.
Hayley McDowell – The Trade
US derivatives exchange CME Group has confirmed it will reopen its Eurodollar options trading pit in two months, following the closure of trading floors globally amid the coronavirus pandemic. CME Group said that while the Eurodollar options trading pit is scheduled to reopen on 10 August, all other open outcry trading pits will remain closed until authorities in Chicago and Illinois reach ‘phase 5’ of their reopening plans.
Investor Election Jitters Starting to Show Up in Stock Options
Lu Wang – Bloomberg
With U.S. stocks having roared back from the pandemic selloff, it may seem like investors are sanguine about what lies ahead. A closer look, however, shows traders pricing in a lot of risk around election time. Options investors are piling into hedges against losses around the Nov. 3 presidential vote. The anxiety is laid bare by the premium on S&P 500 contracts that expire around that date.
Hedge-fund manager who nailed the subprime collapse is leveraging investor cash 200x in ‘audacious’ bet
Shawn Langlois – MarketWatch
A year ago, Hayman Capital Management’s Kyle Bass wrote about “the quiet panic in Hong Kong” and warned of an “impending crisis” in the region. Now, amid mounting unrest, he’s putting his clients’ money — and then some — on a bet that the local currency will collapse.
According to Bloomberg News, Bass is launching a new fund that will use option contracts to leverage the assets by 200 times in an “audacious” all-or-nothing position that will lose investors all their money if Hong Kong’s currency is still pegged to the U.S. dollar after 18 months.
Jay Powell’s U.S. Fed Has Stamped All Over Market Volatility
Marcus Ashworth – Bloomberg
The U.S. Federal Reserve must be rather pleased with how it has contained the financial fallout from the pandemic. The S&P 500 index turned positive for the year this week and the Nasdaq reached a new high. The world is no longer clamoring for the dollar as a safe haven, and Treasury bond yields and corporate credit spreads are substantially lower than they were at the start of the Covid-19 crisis.
Bitcoin Options Open Interest Rises 50% in a Month to Hit $1.5 Billion
Jack Martin – Cointelegraph
Just over a month since open interest in Bitcoin options hit a record high of $1 billion, the latest figures show that it has increased 50% to break $1.5 billion. According to the latest data from market analysis company Skew, total open interest in Bitcoin (BTC) options passed $1.5 billion on June 9. This comes barely a month after open interest crossed $1 billion for the first time, marking a 50% increase in just 33 days.
Describing The Implied Volatility Options Surface
ORATS describes the implied volatility surface as a 3-dimensional surface where the independent variables are time to expiration, and option delta and the dependent variable is implied volatility. To illustrate an implied volatility surface, we have developed a 2-dimensional graph that displays all three axes in the figure below. Summary information about this surface gives the trader a macro view of the implied volatilities for each option chain.
Exchanges and Clearing
Nasdaq Basic Canada Launches on the Cloud; Cost-saving product available via Nasdaq Cloud Data Service; free trial available through Q3 2020
Nasdaq (Nasdaq: NDAQ) today announced it launched Nasdaq Basic Canada—a feed that provides investors around the globe with access to real-time quote and trade data for the full range of Canadian listed equities—on Nasdaq Cloud Data Services (NCDS), which provides clients access to real-time equities, options, news, index, and fund data through cloud-based technology.
Fixed Income Highlights – June 2020 edition
Overall the month of May was very quiet across the Eurex Fixed Income (FIC) derivatives portfolio, with the only positive rays of light being the weekly bund options volume seeing an increase of 1.5% and FIC ETF options 543% respectively. Risk sentiment was low for the month and we saw a reduction in both volumes and open interest (OI). Having said this, we have started to see a pick up in volumes and OI at the beginning of June as the EUR curve steepened. This has been primarily driven by the excess flatteness and the apparent lack of appetite by the ECB to further flatten core curves as markets are biased towards further steepening. At the front end of the curve, we have seen a further pick up in Schatz volumes, both in futures and options, mainly driven by moves witnessed in the swaption space (swaption vol versus cap/floor vol). In recent weeks, we have seen bund vol increase from 2.5% to 4.5% as futures sold off on the back of a strong rally in stocks. However, low levels of delivered over the long term could suppress volatility levels.
Regulation & Enforcement
Cboe Futures Exchange, LLC Product and Rule Certification for Mini Cboe Volatility Index Futures Submission Number CFE-2020-018
Dear Mr. Kirkpatrick: Pursuant to Section 5c(c)(1) of the Commodity Exchange Act, as amended (“Act”), and § 40.2 and § 40.6 of the regulations promulgated by the Commodity Futures Trading Commission (“CFTC” or “Commission”) under the Act, Cboe Futures Exchange, LLC (“CFE” or “Exchange”) hereby submits terms and conditions for Mini Cboe Volatility Index futures (“VXM futures” or “Product”) to be traded on CFE and accompanying rule amendments to incorporate the Product into CFE’s rules (“Amendment”).
Barchart Releases 2020 Futures Market Survey–What Drives Futures Market Participants
Barchart, a leading provider of data and technology services to the financial, media and commodity industries, has released the results of a new survey on the futures market: What Drives Futures Market Participants. This 37-page comprehensive report provides brokerage, financial media firms and other market participants with a detailed look into the data and tools driving engagement among futures traders and investors.