Observations & Insight
GameStop disappoints; Coinbase gets into it with the SEC; Cboe offers Europe options; MIAX Spikes a record; John’s Take on CBOE’s Phil Slocum’s passing and a great moment in options history; and how to execute a strangle — The Spread — September 10, 2021
– Options markets get ready for fall’s chill as equity prices consolidate; Another perspective on small investors;
– John’s Take pays homage to an options veteran and looks at a moment in options market history;
– Pros and cons of using options strangles with Jermal Chandler in the Term of the Week.
****SR: AMERIBOR Term-30 futures are scheduled to launch at the Cboe Futures Exchange today. You can read more about them on the Cboe’s website here and see Dr. Richard Sandor talk about the new product and how it fits into history in a JLN video here. (The video actually begins at about 28 seconds in.)
Crypto ETF assets treble as investors take risks
Steve Johnson – Financial Times
The bulk of the $9tn exchange traded funds industry consists of plain vanilla index trackers focused on mainstream assets. But a couple of much higher risk variants are now growing rapidly — albeit from a low base.
Cryptocurrency ETFs may still be awaiting regulatory approval in the US but they have taken off in other jurisdictions including Canada, Switzerland, Germany and Jersey. Total assets in these funds tripled from $3bn at the end of last year to $9bn as of June, according to data from ETFGI, a consultancy.
There’s a growing wall of worry developing for stocks to climb, says Deutsche Bank
Barbara Kollmeyer – MarketWatch
Is Wall Street ready to break a five-session losing streak? Stocks look mixed in early trading, as September, so far, shapes up just as many pundits predicted — dogged by seasonal weakness, plus the ongoing pandemic fallout.
Our call of the day comes from a fresh Deutsche Bank survey, which finds that 58% of 550 global market professionals polled now expect a 5% to 10% stock pullback by end 2021.
Wall Street Braced for ‘Far Stickier’ Inflation to Test Markets
Joanna Ossinger and Andreea Papuc – Bloomberg
Markets are on tenterhooks for critical U.S. inflation data that could buffet stocks and bonds if they shift expectations about Federal Reserve stimulus withdrawal and the timing of interest-rate hikes.
A backdrop of slower reopening in pandemic-stricken economies due to the delta strain, and price pressures stoked by supply snarls led to declines in both global stocks and Treasuries last week.
Europe’s record-high gas and electricity prices are a taste of what’s in store for global commodity markets, Goldman Sachs says
Harry Robertson – Business Insider
The sky-high prices in Europe’s energy markets could well materialize in a range of commodities markets around the world as their inventories are depleted, Goldman Sachs has said.
Wholesale natural gas and electricity costs have surged to record highs in Europe, as a rise in demand from the reopening of pandemic-hit economies coincides with supply getting snarled up by a number of factors.
Macro hedge funds pray for volatility to justify inflows
Jamie McGeever – Reuters
Macro hedge funds drew in huge inflows and chalked up stellar returns in the second quarter, but stubbornly low volatility and an eerie calm over financial markets since then suggest they may struggle to maintain that performance for the rest of the year.
ETFs: how to balance freedom and investor protection? Disclose the downside
Brooke Masters – Financial Times
Exchange traded funds have moved to the front lines of an ideological battle that has long troubled regulators and consumer advocates: where should the line between freedom and investor protection be drawn?
We are in a period where the prices of many investments appear detached from financial reality. Every time you turn around, the S&P 500 index seems to have hit another all-time high. The prices of everything from “meme stocks” driven by retail investors, such as Robinhood and AMC, to cryptocurrencies such as bitcoin are gyrating wildly.
Handling of Night Session Trading on September 17, 2021
Night session trading on September 17, 2021 in Osaka Exchange, Inc. and Tokyo Commodity Exchange, Inc. will not be conducted due to the preparation for migration of derivatives trading system (“J-GATE3.0”). Trading suspension will be conducted as follows by product category. (*1) JGB Futures and Options on JGB Futures, From: 3:13 p.m. (JST) Index Futures and Options (*2), From: 3:50 p.m. (JST) Commodity Futures and Options on Commodity Futures From: 3:50 p.m. (JST)
Regulation & Enforcement
Exchanges Can Help Minimise Broker-Dealer Operational Risk
Manesh Samtani – Regulation Asia
A paper by Citadel Securities, NYSE, Nasdaq, MIAX, MEMX, and BOX says exchanges can provide an additional layer of protection on top of risk controls implemented by individual firms.
Citadel Securities has published a new paper offering best practices for exchanges to enhance their ability to mitigate broker-dealer operational risks arising from trading systems and their interaction with exchange technology.
The paper was written based on the experience of liquidity providers in collaboration with the New York Stock Exchange (NYSE), Nasdaq, Miami International Securities Exchange (MIAX), Members Exchange (MEMX), and BOX Options (BOX).
Eventus wins FOW Asia Capital Markets Award for market surveillance excellence
Eventus press release via Cision
Also named to global AIFinTech100 list, recognizing innovation in artificial intelligence and machine learning for financial services
Eventus Systems, Inc., a leading global provider of multi-asset class trade surveillance and market risk solutions, has won the FOW Asia Capital Markets Award for Best New Product – Market Surveillance. The award is the second honor the firm has earned in the past three months for its efforts in the Asia-Pacific (APAC) region and follows its inclusion last week in the global AIFinTech100 list for 2021.
Savvy stock traders use these 2 insider tips to know when to buy and sell
Michael Sincere – MarketWatch
For many stock traders, four letters can spell the difference between a winning and losing position. MACD (moving average convergence divergence) ranks among the key stock market indicators (along with moving averages and RSI) that traders use consistently in their analysis.
Let’s discuss a number of creative ways to use this powerful and versatile gauge.
Will the Stock Market Climb or Drop 10%? Here’s One Trade to Handle Both Scenarios.
Randall W. Forsyth – Barron’s
Derek Jeter finally made it to Cooperstown this past week after his induction into the Baseball Hall of Fame was delayed a year by the Covid-19 pandemic. And while Yankee haters may quibble about some of the former captain’s statistics or shortcomings at shortstop, he stands in contrast to some of his prominent contemporaries who have been shut out of the Hall for suspected or admitted steroid use, most notably home run record holder Barry Bonds.
A Roadmap for September Expiration Week
If you are a large-cap technology investor with sizeable investments in the Invesco QQQ Trust Series (QQQ—376.59) or the Technology Select Sector SPDR Fund (XLK—156.63), two exchange-traded funds that have traded at all-time highs in a narrow range during the past two weeks, you probably have not noticed the pullback in the broader market, as measured by the S&P 500 Index (SPX—4,458.58).
Investors who want income need to understand this overlooked stock-market strategy
Philip van Doorn – MarketWatch
You can earn surprisingly high yields with ETFs that employ covered-call strategies
Interest rates have remained persistently low even as the economy emerges from the pandemic.
The yield on 10-year U.S. Treasury notes TMUBMUSD10Y, 1.325% hasn’t been above 2% for more than two years. (It’s yielding 1.32% on Monday.)
As a result, many income-seeking investors have migrated from bonds, considered the safest income investments, to the stock market. But the income from a diversified stock portfolio might not be high enough.
Traders can initiate Modified Call Butterfly strategy in Nifty this week: Shubham Agarwal of Quantsapp
Considering the bullish momentum, the upcoming week can be approached with a low-risk strategy like Modified Call Butterfly in Nifty
Nifty traded in a broader range of 17,270—17,450 and the broader market experienced volatile moves last week. During the last expiry only, Nifty had touched a fresh all-time high of 17,499. After struggling around the top levels, Nifty finally shut shop last week with moderate gains of 0.23% at 17,370. On the OI front, Long Build-up was witnessed in the Nifty over the week gone by.
‘Big Short’ investor Michael Burry offers an inside look at how his iconic bet against the housing bubble began
Theron Mohamed – Markets Insider
Michael Burry, of “The Big Short” fame, reflected on the origins of his iconic bet against the US housing bubble, and praised a late colleague who helped him research the wager, in a tweet on Sunday.
“When it all began…and RIP Joe,” the Scion Asset Management boss said. “A more brilliant one, I never met.”