Death of Chicago’s grain options pits hits traders as crop prices soar; Investors Bet on Dollar’s Slow Downward Drift

May 6, 2021

$40,951/$300,000 (13.7%)
Brian Duff

Observations & Insight

SC: FIA recapped first-quarter futures and options trading and open interest data on Wednesday in a webinar hosted by Will Acworth, FIA’s senior vice president of publications, data and research. The results were much as expected: retail investors led record global volume growth. One new point: Q1 volume in interest rate futures and options rebounded from its prolonged slump of 2020. As for exchange competition in Q1, the top global exchange by volume was the National Stock Exchange of India, followed by Brazil’s B3, with CME Group coming in third. Will retail investors stay around, and will they trade futures? UBS exchange analyst Alex Kramm, also on the call, noted that the exchanges are gearing up for the challenge with new marketing efforts aimed at retail, like more mini contracts.

Lead Stories

Death of Chicago’s grain options pits hits traders as crop prices soar
Tom Polansek, Julie Ingwersen – Reuters
U.S. grain brokers and analysts on Wednesday lamented CME Group Inc’s decision to permanently end open-outcry options trading at a time when crop prices are surging, saying that pit traders could help navigate volatile markets.

Investors Bet on Dollar’s Slow Downward Drift
Julia-Ambra Verlaine – WSJ
Some investors are betting on a slow, steady grind downward for the U.S. dollar. Hedge funds and asset managers are scooping up derivatives that pay off when the dollar declines slowly or stays within a narrow range. In one strategy, known as a strangle, traders sell both bullish and bearish options for short periods. They can collect a premium from selling the contracts and profit as long as the underlying currency remains steady and doesn’t trigger the options.

Ether Traders Load Up on $8K Call Options in Bet Price Will Double by July
Omkar Godbole – Coindesk
Prices for ether, the native cryptocurrency of the Ethereum blockchain, have already quadrupled this year. Now, some options traders are betting prices could double again – by the end of next month. Market data reveals growing demand for ether’s deep out-of-the-money (OTM) call options – bullish bets with strike prices well above the spot market price of the underlying asset. Ether has rallied from $2,000 to record highs over $3,500 in the past 10 days. On Tuesday, a single high-net-worth trader or a group of traders bought 9,000 contracts of the $8,000 call expiring June 25.

Actress-Turned-Mogul Alba Makes $122 Million in Honest IPO
Devon Pendleton – Bloomberg
Beauty firm’s debut values Alba’s 5% stake at $98 million; IPO also results in 260% return for Arnault-backed L Catterton
Actress Jessica Alba cemented her claim to one of the most lucrative side gigs in Hollywood after shares of her beauty business, the Honest Co., soared 44% in its market debut. The “clean” beauty- and baby-products maker’s stock closed at $23 Wednesday after it priced the shares at $16 in its initial public offering. Alba’s roughly 5% stake is valued at $98 million, according to the Bloomberg Billionaires Index. She also has exercisable options valued at about $24 million.

Exchanges and Clearing

Cboe Prioritizes Global Data and Analytics
Shanny Basar – Traders Magazine
Ed Tilly, chairman, president and chief executive of Cboe Global Markets, said on the exchange group’s first quarter results call that one of the top priorities is global expansion of its data and analytics offering. Catherine Clay, executive vice president, has the responsibility of delivering this aim as she has been appointed head of a newly created division, Data and Access Solutions. In March this year Cboe announced the combination of Information Solutions with Market Data and Access services. Clay was promoted from senior vice president, Information Solutions, and joins Cboe’s executive leadership team in her new role.

SGX RegCo leverages RegTech for oversight of listed issuers
Singapore Exchange Regulation (SGX RegCo) is introducing the use of artificial intelligence and other RegTech solutions to enhance its oversight of listed issuers. The solutions will help automate the extraction of data that can then be used to compute certain indicators of financial risks. The indicators are based on SGX RegCo’s observations of indicative signs of possible financial distress or irregularities in listed companies. These include, among others, the existence of long outstanding trade receivables; significant asset write-offs; low cash coverage ratio and negative working capital.

Cboe Global Markets Reports April 2021 Trading Volume
Cboe Global Markets, Inc., a market operator and global trading solutions provider, today reported April monthly trading volume statistics across its global business lines. The data sheet “Cboe Global Markets Monthly Volume & RPC/Net Revenue Capture Report” contains an overview of certain April trading statistics and market share by business segment, volume in select index products, and RPC/net capture, which is reported on a one-month lag across business lines.

Cboe Expands European Leadership Team with Senior Hire
PR Newswire
Cboe Europe, a pan-European exchange operator and a subsidiary of Cboe Global Markets, today announced that Natan Tiefenbrun will join the company as Senior Vice President, Head of European Equities. In this new role, Natan will oversee Cboe’s European equities trading business, reporting to David Howson, EVP, President Europe and Asia-Pacific, Cboe Global Markets. He will join in June and be based in Cboe’s London office. “We are thrilled to have Natan join the team. He has a long and highly successful track record in European equities trading and brings a unique skillset to Cboe,” Howson said. “We are excited to leverage his expertise and extensive industry relationships in support of our strategic growth plans and enhance our position as one of the top European equities exchange operators.”

Regulation & Enforcement

UK to scrap EU rule giving choice of clearer in derivatives
Damian Shepherd – City AM
Britain will scrap a rule inherited from the European Union that aimed to open the listed derivatives market to more competition, saying it was not appropriate to implement alone. The UK had championed the open access rule, which allows buyers and sellers of derivatives listed on exchanges across the EU to choose where they clear their contract, rather than be locked into using a clearer.


JP Morgan expands data platform for trading clients with Confluence
Joe Parsons – The Trade
JP Morgan has expanded its partnership with Confluence to integrate the vendor’s risk and performance measurement data with its data and analytics platform for trading clients. From the third quarter of this year, Confluence Delta will increase its coverage to include US securitised products powered by JP Morgan’s proprietary analytics. It will also be available to JP Morgan’s securities services clients. The move expands the five-year partnership the two firms struck in June 2019 during the first phase of the collaboration between JP Morgan and FinTech StatPro, prior to Confluence’s acquisition of the firm in October 2019.


Bank of America EMEA execution services head Tiefenbrun departs for Cboe Europe
Hayley McDowell – The Trade
Exchange operator Cboe Europe has hired industry veteran and the head of execution services for EMEA at Bank of America to lead its European equities trading business. Natan Tiefenbrun will join Cboe as senior vice president and head of European equities in London next month reporting to president of Europe and Asia Pacific, Dave Howson, after eight years with Bank of America. Tiefenbrun previously led the agency equities trading services across EMEA at Bank of America, including high-touch execution, portfolio trading and electronic trading. Earlier in his career, he spent 13 years at agency broker Instinet developing the firm’s algo trading portfolio trading and sponsored access business.


Options Straddles vs. Strangles: The Basics of Volatility and Magnitude Strategies
Doug Ashburn – The Ticker Tape
Traders new to options strategies typically begin with the basic call and put strategies—selling covered calls for potential income and buying puts for temporary downside protection. Although many traders never venture beyond the basics, some look at the versatility and flexibility of advanced options strategies and move to strategies that can help them with pinpointed objectives. When traders first consider moving into more advanced strategies, the first thing they think of is greater risk potential. That’s important, but also consider that advanced strategies are more complex, so understanding what your trades will be doing under different conditions becomes even more important.


All About Options (With) Expert Sheldon Natenberg
Join Cboe Options Institute on Wednesday, May 12, to learn from one of the industry’s most renowned option trading educators. This webinar will interest traders of all ages and experience levels, but if you are new to options trading you really won’t want to miss it.
Wednesday, May 12, 2021
12:00 p.m. ET

Fundamentals of Futures & Options (also applicable to Series 3 Exam)
For more than 30 years, IFM has consistently provided learners with a solid foundation and understanding of futures and options markets and trading including terminology, risk management, pricing, and basic trade strategies. This instructor-led virtual course includes lectures from an engaging instructor with real-world expertise and supported by class discussion, practice exercises and educational materials. The course fee includes two must-read industry books, “Futures and Options” and the “Guide to U.S. Futures Regulation.”
Dates: May 10, 2021 through May 14, 2021, 12:00 p.m. to 2:00 p.m. ET.
Location: Virtual Live. 2-hour sessions over 5 days.
Early-bird $495
Fee $595
Instructor: Marti Tirinnanzi
Class size registration is limited to approximately 20 participants to promote student participation and interaction.

The Covered Call Options Strategy
Date: Wednesday, May 12, 2021
Time: 3:30 p.m. CT
Duration: 1 hour
Mark Benzaquen – Principal, Investor Education – OCC
For options investors, the covered call is one of the core strategies for income generation, but there are many details to consider before opening a position. On May 12, join The Options Industry Council’s Mark Benzaquen, a former pit broker who now focuses on options education, for a detailed overview of the covered call.


Clearing 101: Exchanges, Clearinghouses and CCPs
Dates: Sep. 15, 2021 12:00 p.m. – Sep. 16, 2021 1:30 p.m. ET.
Location Virtual Live. Two 90-sessions over 2 days.
Early-bird $199
Fee $225
Instructor: Marti Tirinnanzi
Registration is limited to approximately 20 participants to promote student participation and interaction.
Join us for a short program (90 minutes each day for 2 days) that explains the multilateral systems that provide the infrastructure for transferring, clearing and settling payments, derivatives and other financial transactions among financial institutions and end users. Following Dodd Frank, clearinghouses became designated as Systemically Important Financial Market Utilities, vital to the operations of the financial markets and subject to heightened regulatory scrutiny. Buyers and sellers in exchange transactions rely on clearinghouses to intermediate transactions and to manage credit risks between trading parties. As such, clearinghouses promote transparency, efficiency, and stability by providing market-based pricing, daily settlement, and ensuring adequate capitalization for markets to function.


Google Adopts Hybrid Workweek, With 20% of Its Employees to Work Remotely
Tripp Mickle – WSJ
Alphabet Inc.’s Google announced a series of moves to offer employees more workplace flexibility, allowing a fifth of its staff to work from home permanently and another fifth of workers to shift to a different geographic location. In an email on Wednesday, Alphabet Chief Executive Sundar Pichai said the company envisions that about 20% of staff would work from home on a permanent basis, while another 20% of staff would shift to new offices. The remaining 60% of staff will work from their current location. Employees will have to apply for both location-change options, with approval being up to their managers.

(Podcast) OPR 363: It’s Time For A Back Spread in COIN
Options Playbook – Options Insider
In this episode, Brian looks at last week’s Amazon (Ticker AMZN) earnings play. This week he does a back spread in Coinbase (Ticker COIN) ahead of earnings.

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