Observations & Insight
JJL: George Gero has passed away, reportedly after battling COVID-19. George was a widely respected futures industry statesman who was inducted into the FIA’s Hall of Fame in 2019. George was a leader in the New York markets, including as chairman emeritus of the discontinued Commodity Floor Brokers & Traders Association. This was an organization he created for all the independent brokers and traders so they could get health insurance. He was that kind of a guy, always looking out to help other people. He also always treated everyone the same, no matter what their station in life.
MR: SPIKES Futures (SPK) are scheduled to resume trading today on MGEX, the Minneapolis Grain Exchange, via the CME’s Globex platform. SPIKE Options are still trading on MIAX Options. For more information, check out this handy resource guide.
The Spread: Brexit Stage Right
This week on The Spread, MIH and MGEX complete their merger, Cboe’s Chief Marketing and Communications Officer Carol Kennedy and the CFTC’s Chairman Heath Tarbert announce their retirement, and more.
Ethereum options trade volume surged in November to hit $1.76 billion for the month
Michael McSweeney – The Block
November saw a significant jump in monthly trade volume for Ethereum options, according to data collected by The Block Research. The November figure — $1.76 billion — represents a 153% increase from October’s $695 million. It’s the highest reported monthly volume, surpassing August’s record of $1.03 billion.
Gammon Capital Up 449% Is Betting on New Wave of Market Turmoil
Justina Lee – Bloomberg
A New York hedge fund that’s gained 449% in this year’s pandemic roller-coaster is betting on a new wave of volatility in the event Congress fails to extend a key bank provision in any new stimulus bill. As time runs short on breaking the legislative impasse, Gammon Capital LLC has been loading up on bearish stock options to wager on the prospective market fallout.
Wall Street IPO bonanza stirs uneasy memories of 90s dotcom mania; Investors warn of ‘frothiness’ as retail investors race to get a slice of hot offerings
Eric Platt, David Carnevali and Michael Mackenzie – FT
The frenzy surrounding Airbnb’s Wall Street debut began hours before the first trade. As bankers worked to establish an opening price, the number of options contracts changing hands in robotics maker ABB skyrocketed. The apparent flub came down to a single letter: ABB was missing an N in its ticker that would otherwise denote Airbnb.
Funds continue to trim CBOT longs, though the wheat bulls may be back
Karen Braun – Reuters
Speculators’ optimistic views of Chicago-traded corn and soybeans remain at historically high levels despite continued light selling last week, and although the wheat bulls had recently gone dormant, they have likely burst back onto the scene over Russian supply concerns.
In the week ended Dec. 8, money managers reduced their net long in CBOT soybean futures and options to 185,655 contracts from 194,683 a week earlier, according to data from the U.S. Commodity Futures Trading Commission.
Hedge fund oil buying slows as prices near critical level
John Kemp – Reuters
Hedge fund managers purchased petroleum futures and options last week for the fifth week in a row, betting the rollout of coronavirus vaccines will boost international aviation and business activity from early next year.
But the rate of buying is slowing, perhaps because of the advent of the holiday season, but also because risks are shifting, with prices having already risen rapidly and so are increasingly vulnerable to a short-term correction.
Dollar falls; sterling jumps as Brexit deal hopes lift risk appetite
Suzanne Barlyn – Reuters
The dollar fell close to two-year lows on Monday as renewed hopes for a Brexit deal and U.S. coronavirus relief plan, as well as progress on COVID-19 vaccines, lifted riskier currencies.
The pound gained after the UK and European Union agreed on Sunday to continue Brexit talks and the EU’s chief negotiator said a deal was still possible.
Exchanges and Clearing
OKEx deepens commitment to users listing a further 6 innovative projects last week
Press Release (via Markets Insider)
OKEx (www.okex.com), a world-leading cryptocurrency spot and derivatives exchange, has strengthened its commitment to delivering the widest product diversity for its users by listing six new innovative projects last week. OKEx users can now invest in some of the most in-demand tokens in the industry with reduced trading fees thanks to OKEx’s ongoing user loyalty campaign.
Regulation & Enforcement
New Data Rules Aren’t the Whole Tale of the Tape for Exchange Stocks
Telis Demos – WSJ
The rules are changing for stock exchanges when it comes to market data revenue, but it needn’t be a game changer for investors. Exchanges have always fought hard for market share in stock trading, which in turn helps partly determine how much of the collective data fees for the market’s Securities Information Processors, or SIPs, go to that exchange. But the Securities and Exchange Commission on Wednesday adopted rules to open that exclusive data to competition. In theory this threatens SIP revenue for exchanges because market participants may get that data directly or from competing aggregators, analysts have noted. Cboe Global Markets CBOE 2.52% generated about 9% of its 2019 net revenue from SIP data, according to analysts at Piper Sandler. Its stock is down over 6% since the SEC’s announcement.
Why Triple Witching Still Strikes A Spell
Rance Masheck, Forbes Finance Council – Forbes
Options trading affects stock prices. That’s a fact. What a lot of people don’t understand is that options are really about intentions, and the people who write, buy and sell options contracts have many different intentions. However, the sum of all options trades, no matter the intent, results in events that move stock prices. That is a very important thing to understand about the markets in general. A general point that is misunderstood by investors and traders alike is what impact options contracts will have on various stocks. What are some of the main uses of options? Let’s consider them.
Roundtable Discussion: Trading Opportunities in European Volatility with VSTOXX Derivatives
Topic – Roundtable discussion: Trading Opportunities in European Volatility with VSTOXX Derivatives
Description – Join Eurex, RCM-X, Shore Capital Research and Equity Armor Investments for a webcast discussion on:
1. Why volatility is so relevant in today’s markets?
2. What factors could influence the spread between VSTOXX & VIX volatility indices? Are these spreads seasonal or event driven? Could traders find a way to incorporate this data into their daily trading? What events in the near to mid-term will affect these spreads?
3. Besides the spread trading opportunity (VSTOXX vs VIX), what other trading opportunities may arise out when considering the VSTOXX?
4. Why is there a negative correlation between VSTOXX, volatility Indices and the equity markets? Does this behavior offer potential opportunities to hedge an equity portfolio?
Dec 16, 2020 11:00 AM in Central Time (US and Canada)
2020 Annual Trends in Futures and Options Trading
27 January 2021 • 10:30 AM – 11:30 AM ET • Webinar
This webinar will highlight the main trends in trading activity in 2020 in the global exchange-traded derivatives markets, with category and regional breakdowns as well as exchange and contract rankings.
Moderator: Will Acworth, Senior Vice President of Publications, Data & Research, FIA
Hard Brexit: Why Investors Are Misreading the Chances of a No-Deal Scenario
Larry Hatheway and Alex Friedman – Barron’s
Game theory is useful when it comes to understanding difficult negotiations. But it is crucial to know what game is being played, and what is at stake.
A decade ago, during the euro zone crisis, coordination was ensured by unfathomable penalties associated with conflict. The same is not true for Brexit.
(Podcast) Volatility Views 426: The Great Volatility Celebration
Volatility Views – Options Insider Network