Crypto Traders Eye Ether Record, Rising Volatility From US ETF Hype; Bullish Bitcoin options dominate May’s $6.5 billion expiry

May 28, 2024

Observations & Insight


Volatility Insight of the Week: G5 Foreign Exchange Skew, as measured by CME Group’s volatility index, has been elevating throughout the month of May, suggesting options traders are positioning for upside risk. To learn more about CVOL, please visit HERE.

Cboe’s Henry Schwartz Discusses Options Market Growth and Future Trends at Industry Conference
JohnLothianNews.com

ASHEVILLE, N.C. (JLN) – Henry Schwartz, Vice President and Global Head of Client Engagement, Data & Access Solutions at Cboe Global Markets, provided insights into the current state and future trends of the options market during an interview at the Options Industry Conference in Asheville, NC. The interview was part of the JLN Industry Leader video series sponsored by the Options Clearing Corporation (OCC).

Watch the video »

Lead Stories

Crypto Traders Eye Ether Record, Rising Volatility From US ETF Hype; Options market shows flurry of wagers on $5,000 all-time peak; Investors also expect far greater swings in Ether than Bitcoin
Sidhartha Shukla – Bloomberg
Bets on more Ether gains are intensifying following a surprise US regulatory pivot toward allowing exchange-traded funds for the digital asset, even as questions swirl about the strength of demand for the products. The shift by the US Securities & Exchange Commission catalyzed a 26% jump in the second-largest token in the seven days through Sunday, the biggest weekly advance since the 2021 crypto bull market, data compiled by Bloomberg shows.
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Bullish Bitcoin options dominate May’s $6.5 billion expiry; Bitcoin bulls have strong incentives to push the BTC price above $70,000 on May 31, but the clock is ticking.
Marcel Pechman – Cointelegraph
Bitcoin investors are typically bullish, and despite multiple failed attempts to sustain prices above $71,000, derivatives betting on $80,000 and $90,000 continue to proliferate. This behavior is driven by expectations of high-volatility events such as geopolitical tensions, socio-political changes, U.S. presidential support, and increased corporate adoption of Bitcoin.
/jlne.ws/3VgCOjZ

MEMX Issue Resolved After NYSE, Cboe Paused Routing to Exchange; Interruption not related to industry move to T+1, person says
Katherine Doherty and Bre Bradham – Bloomberg
An issue at MEMX LLC was cited by exchanges including NYSE, Nasdaq and Cboe which temporarily suspended routing to the venue founded by some of the biggest players in US stocks. The three equity exchanges said Tuesday morning before markets opened that they were resuming routing to the Members Exchange after the issue, which had prompted NYSE and others to declare “self-help” — a remedy for when venues can’t reach another exchange and subsequently remove their quotes.
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Heard on the Street: Don’t Expect Stocks to Rocket This Summer
Spencer Jakab – The Wall Street Journal
The period between Labor Day and Memorial Day will see Americans consume about 7 billion hot dogs and watch around 1,300 Major League Baseball games but step away from their most popular pastime of late: playing the stock market. The summer span, which will be 98 days this year, typically sees subdued share trading volume and mostly sideways movement. After a torrid start to the year and with major indices near record highs, though, that isn’t what investors seem to expect. Following the S&P 500’s gain of 11.21% through Friday, Citi’s Panic/Euphoria model, which uses inputs such as options trading, margin debt and newsletter sentiment, is now back to euphoria mode, according to independent strategist Peter Boockvar.
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Exchanges

Best in Market Structure: Chuck Mack, Nasdaq
Anna Lyudvig – Traders Magazine
Traders Magazine spoke with Chuck Mack, Vice President, Head of Strategy & Market Structure North American Markets, Nasdaq, who won Best in Market Structure at the 2024 Markets Choice Awards.
Briefly describe your background and career to date.
I am proud to say I have been at Nasdaq for over two decades. When I started in the equities space, I was at a small firm called Brut ECN (Electronic Communications Network). The industry was experiencing rapid technological change with the electronification and automation of trading. In 2004, soon after I started at Brut ECN, Nasdaq acquired the company, adding to an already explosive period of growth for Nasdaq and propelling my career.
/jlne.ws/4dX4WQu

Excell with Options: Inflationary pressures on GBP vs USD FX futures
Rich Excell – CME Group
Rich Excell explores the relationship between the GBP/USD market and what might drive a rotation of capital into one and out of another.
From my background in FX long ago, to the time I spent in London running a HF platform, I know that if I’m looking into the GBP/USD market, the first place I want to look is the relative growth in the M2 money supply in each country. This was always a good place to start to get a broad sense of under- or over-valuation of the exchange rate. The Bank of England and the Federal Reserve have both been on a similar path in terms of monetary policy, hiking from early 2022 until late summer of 2023. However, what could be different is the extent to which the banks in the economy are taking this monetary policy action and having it impact the amount of credit creation in the economy.
/jlne.ws/3yOghSA

MCX shares pare early gains even as SEBI simplifies norms for launching options in commodities; stock gains 179% in 1 year
Zeebiz
MCX shares will be on investors’ radar in Tuesday’s session as the market watchdog has simplified norms for launching options with commodity futures as derivatives. The said change will come into force from June 1, it said. Shares of the country’s leading commodity exchange MCX swung between gains and losses even as the market regulator SEBI has simplified norms for launching options with commodity futures as underlying. At the last count, shares of the company traded marginally lower at Rs 3,807.2, while at day’s high it zoomed to Rs 3,883.3, gaining 2 per cent over the previous close.
/jlne.ws/3R61wkt

Equity Trader Alert #2024 – 31 Nasdaq Testing Opportunity: Saturday, June 2, 2024
Nasdaq
Nasdaq Production system will be open from 9:00 a.m. to 12:00 p.m. Eastern Time (ET) for general customer testing this Saturday, June 2, 2024. Firms must register for Saturday testing by contacting Nasdaq Trading Services by 12:00 p.m. (ET), on the Friday prior to the Saturday test in which they would like to participate. The 2024 Saturday Test schedule can be found on the Saturday Testing Policy Page along with a complete list of products and systems available during the test dates.
/jlne.ws/4aBCtN7

Equity Corporate Actions Alert #2024 – 254 Information Regarding the Reverse Stock Split and CUSIP Number Change for BioCardia, Inc. (BCDA)
Nasdaq
BioCardia, Inc. (BCDA) will effect a one-for-fifteen (1-15) reverse split of its Common Stock. The reverse stock split will become effective on Thursday, May 30, 2024. In conjunction with the reverse split, the CUSIP number will change to 09060U606.
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Regulation & Enforcement

NYSE CHICAGO, INC. In the Matter of: BofA Securities, Inc. (CRD No. 283842) Respondent. Proceeding No. 2020066382607 ORDER INSTITUTING PROCEEDINGS, ACCEPTING SETTLEMENT, MAKING FINDINGS, AND IMPOSING SANCTIONS
NYSE Chicago
NYSE Chicago, Inc. (“NYSE Chicago” or the “Exchange”), pursuant to Article 12, Rule l(d) of the Rules of the Exchange, in lieu of filing charges, hereby enters this Order against the Respondent BofA Securities, Inc. (“Respondent,” or the “firm”) instituting proceedings, accepting an Offer of Settlement, making findings, and imposing sanctions.
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Strategy

Options volatility is getting crushed with little relief ahead
The Star
Volatility is getting crushed. Everywhere. One risk event after another, from inflation data to Nvidia Corp earnings, gets cleared with barely a ripple to slow the market’s grind higher. And with option selling in full demand, volatility is going nowhere but lower this month. The VIX Index sank early last Thursday to the lowest in almost five years before bouncing back a bit. At 11.5, it was a few points shy of the record lows from 2017, which marked the least volatile stock market in modern history.
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The market’s ‘fear gauge’ is hitting rock bottom. Should you be scared?; The CBOE Volatility Index (VIX) has been scraping along historically low levels. When volatility sinks to such depths, it is often a sell signal.
Gregg Greenberg – Investment News
It’s getting awfully quiet out there in the stock market. A little too quiet. The CBOE Volatility Index (VIX), also known as Wall Street’s “fear gauge”, has been scraping along historically low levels around 12. The long-term average for the VIX is 19.6, according to Dow Jones. The VIX, which is derived from trading activity in S&P 500 options expiring within the next month, represents the expected range of movement for the S&P 500 over the coming year. When volatility sinks to such depths and remains subdued, it is often a signal to market participants that a selloff is on the way. So are financial advisors worried about a potential Jaws (hey, it is summer) lurking below the market’s still waters, ready to pounce on their client portfolios? And if so, are they cutting bait on this bull market, up 12 percent year-to-date?
/jlne.ws/452gIVF

Miscellaneous

Archegos Sent Goldman Some Free Money; Also aluminum warehouses, Barings private credit defections, T+1 day and the GameStop ATM.
Matt Levine – Bloomberg Opinion
Archegos oopsie
A few years ago, Citigroup Inc. had an oopsie where it accidentally wired $900 million to some hedge funds. After giving it some thought, most of the hedge funds decided to keep the money. Citi sued to get the money back and initially lost, though it eventually won. It was weird that Citi initially lost, and it was a little weird that the hedge funds even tried to keep money that had been wired to them by accident. But they had an argument that they deserved the money: They were in a fight with Revlon Inc. over some covenants, and Citi was the administrative agent on their loan to Revlon and had accidentally sent the money on its behalf. And, you know, there was the money, in their bank accounts.
/jlne.ws/3VgXF6O

Wall Street Starts Calling Time on ESG Labels After Backlash

Wall Street Starts Calling Time on ESG Labels After Backlash

First Read Hits & Takes John Lothian & JLN Staff Miami International Holdings, Inc. (MIH) announced that the SEC has approved MIAX Sapphire LLC's application to become a national securities exchange. MIAX Sapphire, MIH's fourth national securities exchange for...

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The Spread

Traders Betting on China Easing Boost Bearish Options on Banks

Observations & Insight Miami International Holdings, Inc. (MIH) announced that the SEC has approved MIAX Sapphire LLC's application to become a national securities exchange. MIAX Sapphire, MIH's fourth national securities exchange for U.S. multi-listed options,...

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Options Bulls Come Out to Play

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