Crypto ‘Fear and Greed’ Gauge Improves a Bit After 60% Selloff

Jul 5, 2022

Observations & Insight

Options Discovery – Intro to risk with Tony McCormick
JohnLothianNews.com

This week’s episode of Options Discovery discusses risk and what it means in the world of options. Alex Teng sits down with Tony McCormick, the CEO of BOX Exchange – the self regulatory arm of Box Options – to discuss that topic.

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Lead Stories

Crypto ‘Fear and Greed’ Gauge Improves a Bit After 60% Selloff
Isabelle Lee – Bloomberg
If trader sentiment is any guide, cryptocurrencies could snap back or at least stop selling off after one of their worst quarters in history.
The crypto Fear and Greed Index climbed to 19, marking the highest point in two months, according to Arcane Research. The measure is pushing toward the “fear” area after sitting comfortably in the “extreme fear” level, the firm’s analysts said in a note.
/jlne.ws/3AprQ1p

Stock Market Outlook: VIX Needs to Spike up for a Bottom in Equities
Carla Mozée – Markets Insider
The bleeding in the S&P 500 this year is unlikely to stop until there’s a frenzied level of selling in the stock market, one financial newsletter told investors on Tuesday.
The S&P 500 dropped Tuesday, with nine of its 11 sectors in the red. The index has lost 22% from the all-time high of 4,818.62 it reached six months ago.
/jlne.ws/3yGTfuE

Short Sellers Pull Back on Their Bets Against the Stock Market
Hannah Miao – WSJ
Short sellers are easing off their bets of pain ahead in the stock market.
Total U.S. short selling increased by $20 billion in June, according to technology and data-analytics company S3 Partners. That was down from a $61 billion increase in May and less than most months in 2022.
/jlne.ws/3yH6hbo

S&P 500 Tumbles as Renewed Recession Fears Rattle Wall Street
Jess Menton – Bloomberg
US stocks sank Tuesday as investors weighed fresh worries about a looming US recession against the possibility of China tariffs being rolled back.
The S&P 500 Index was down 1.8% as of 9:50 a.m. in New York, after rebounding Friday to snap a four-day skid. All of the 11 sectors were lower, led by declines in materials, industrials and financials. Breadth was weak with just 12 of 503 stocks higher. The tech-heavy Nasdaq 100 slid 1.4%, pressured by a slump in growth stocks shares. The Dow Jones Industrial Average dropped 1.8%.
/jlne.ws/3P90QHU

Exchanges

U.S. exchanges win court appeal on SEC market data order
Reuters
A U.S. appeals court on Tuesday struck down an order by the Securities and Exchange Commission that would have allowed some financial firms that are not stock exchanges to have a say in how essential stock market data is priced and disseminated.
The ruling was a win for large exchange groups like Intercontinental Exchange Inc’s NYSE, and Nasdaq Inc, which had challenged the SEC’s order.
/jlne.ws/3OQS0P5

OCC June 2022 Total Volume Down 7.4% Year-Over-Year
OCC
OCC, the world’s largest equity derivatives clearing organization, announced today that year-to-date average daily volume through June 2022 was 41.2 million contracts, up 4.5 percent compared to year-to-date average daily volume through June 2021. Total volume was 806.0 million contracts, down 7.4 percent compared to June 2021.
Highlights
ETF options cleared contract volume up 64.1% year-over-year
Index options cleared contract volume up 51.9% year-over-year
Stock Loan transaction volume up 19.9% year-over-year
/jlne.ws/3IdYXY1

CME Group Reports Q2 and June 2022 Market Statistics
CME Group
Highest-ever June ADV, with Q2 volume up 25% year-over-year; Q2 Equity Index ADV grew 57%, including record Micro E-Mini S&P 500 futures volume; Record SOFR futures and options ADV, OI
CME Group, the world’s leading derivatives marketplace, today reported its Q2 and June 2022 market statistics, showing average daily volume (ADV) increased 25% to 23.1 million contracts during the second quarter, the company’s third-highest quarterly volume ever. June ADV increased 30% to 24 million contracts, representing the company’s highest June volume on record. Market statistics are available in greater detail at https://cmegroupinc.gcs-web.com/monthly-volume.
/bit.ly/3yh3rZs

June 2022 figures at Eurex
Interest rate derivatives showing strongest growth among listed derivatives (up 42 percent); Total Repo volumes increasing by 54 percent y-o-y; Notional outstanding in long-dated OTC interest rate swaps up 24 percent
Deutsche Börse
Total traded derivatives contracts at Eurex grew by 26 percent in June, from 167.7 million to 210.9 million compared to the same month last year. Interest rate derivatives showed the strongest year-on-year growth, up 42 percent from 57.9 million traded contracts to 82.0 million, while index derivatives grew by 28 percent, from 77.9 million traded contracts to 99.3 million. Total contracts traded in equity derivatives fell by 8 percent to 29.2 million.
/bit.ly/3NJzve9

Securities lending CCP services: redesigning the model
OCC
Matt Wolfe, executive director, clearing systems at OCC, explains the evolution of the company’s CCP services for stock loan transactions and the benefits anticipated from DLT-based upgrades to its Market Loan Program. Read more at securitiesfinancetimes.com.
/jlne.ws/3uOCVFZ

Moscow Exchange To Resume Evening Derivatives Trading
Press Release
Starting 12 July 2022, Moscow Exchange will resume after-hours trading on the Derivatives Market to respond to strong demand from clients.
/jlne.ws/3IkB6px

BGC Partners arranges Asia’s first intermediated block trade of CME Group Bitcoin options; The move follows BGC’s arrangement of the first ever block trade of Micro Bitcoin options offered by CME Group earlier this year.
Wesley Bray – The Trade
GFI (HK) Securities, a subsidiary of interdealer broker BGC Partners, has arranged its first ever intermediated block trade of CME Group Bitcoin options in Asia between Cumberland and Goldman Sachs. The transaction brought together major global market participants in the cryptocurrency space and falls in line with BGC’s aim to remain a partner of choice in the digital assets’ realm.
/jlne.ws/3ArTOcR

Regulation & Enforcement

What’s Stock ‘Payment for Order Flow’ and Why the SEC Is Skeptical
Katherine Doherty and Lydia Beyoud – Bloomberg
The way stocks are bought and sold in the US has changed dramatically over the past decade, and at the heart of the changes is something called payment for order flow, or PFOF. It’s what’s made much of stock trading commission-free, which in turn brought into the markets the millions of new retail investors who fueled 2021’s so-called meme stock revolution. But PFOF has also become a focus of attention for the US Securities and Exchange Commission and other critics, some of whom wonder if the “free” model is in fact the best deal.
/jlne.ws/3uOBBmv

Bank of England Says Crypto Needs Tougher Rules After $2 Trillion Drop
William Shaw and David Goodman – Bloomberg
The Bank of England said a $2 trillion plunge in the value of cryptoassets underscores vulnerabilities in the market and the need for tougher law enforcement and regulation.
The market capitalization of digital assets has tumbled to about $900 billion from a peak of almost $3 trillion in late 2021, the BOE’s Financial Policy Committee said Tuesday.
/jlne.ws/3NPdiv8

Statement on Decision in Jury Trial of Bradley C. Davis
Gurbir S. Grewal, Director, Division of Enforcement – SEC
After a six day trial, a jury in the Central District of California found Bradley C. Davis, a former Vice President of Nordson Corporation, liable for insider trading in Nordson stock and options contracts.
/jlne.ws/3R5etJT

Strategy

Funds dump CBOT corn, soy in selloff but remain wary of short bets
Karen Braun – Reuters
Speculators downsized their bullish bets in Chicago grain and oilseed futures late last month amid a historically large drop in prices, and relatively supportive data from the U.S. government late last week, especially for soybeans, seemingly did nothing to stop the selling trend.
CBOT December corn futures plunged 6% in the week ended June 28, and November soybeans fell 3.2%, though both contracts traded down as much as 8% at different points in the period. Speculative selling was a bit heavier than expected.
/jlne.ws/3IeLnDI

Events

The Options Industry Council (OIC)
OIC
The Options Industry Council (OIC) is excited to present three brand new, live webinars in the third quarter of 2022, with the first two sessions focused on volatility strategies and the last centered around helping investors understand index options.
OIC begins the quarter with the July webinar, titled Understanding Volatility and Options. In August, the volatility theme continues, this time with an event called Using Implied Volatility to Implement Strategies. Finally, the quarter concludes in September with The Unique Characteristics of Index Options, featuring a review of how these products differ from equity and ETF options.
/jlne.ws/3Auf6H4

FIA Forum: Frankfurt 2022
FIA
FIA returns to Frankfurt to address key issues impacting listed and cleared derivatives market participants in the region. Against the backdrop of ongoing market volatility and the march toward the Capital Markets Union, industry experts and regulators will explore regulatory developments, the renewed focus on data quality, improvements to industry operations, the emergence of new products to address the sustainable finance agenda, and the growth of crypto futures markets.
Join us for this one-day forum and connect with leading firms that are driving the growth and redefinition of the European cleared derivatives markets.
/jlne.ws/3yFcgNX

Miscellaneous

Crypto collapse reverberates widely among black American investors
Taylor Nicole Rogers – Financial Times
The widespread losses caused by the cryptocurrency crash are even broader among black investors.
A quarter of black American investors owned cryptocurrencies at the start of the year, compared with only 15 per cent of white investors, according to a survey by Ariel Investments and Charles Schwab. Black Americans were more than twice as likely to purchase cryptocurrency as their first investment.
/jlne.ws/3uq0fJG

Archegos Analyst Wants His Money Back
Matt Levine – Bloomberg
Here’s an amazing trade, if you can get it. Archegos Capital Management, the family office of Bill Hwang, had a hugely successful run followed by a disastrous collapse in March 2021. (We talked about it here, here and here.) Archegos’s assets grew from about $4 billion in 2020 to roughly $36 billion on March 22, 2021; by March 29 they were roughly zero. If you had money in Archegos — and you didn’t, it was a family office running mainly Hwang’s own money — then you had enormous paper profits as of March 22, and nothing as of March 29. But what if, on March 30, you could look around at the rubble and decide to withdraw what you had in the fund as of March 22? That would be pretty good, right?
/jlne.ws/3Ik0QCI

How Wall Street Escaped the Crypto Meltdown
Emily Flitter – NY Times
Last November, in the midst of an exuberant cryptocurrency market, analysts at BNP Paribas, a French bank with a Wall Street presence, pulled together a list of 50 stocks they thought were overpriced — including many with strong links to digital assets.
They nicknamed this collection the “cappuccino basket,” a nod to the frothiness of the stocks. The bank then spun those stocks into a product that essentially gave its biggest clients — pension funds, hedge funds, the managers of multibillion-dollar family fortunes and other sophisticated investors — an opportunity to bet that the assets would eventually crash.
/jlne.ws/3R4ra7A

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