E*Trade Considers Kicking Meme-Stock Leader Keith Gill Off Platform

Jun 4, 2024

Observations & Insight

Controversial Past Shadows CME Broker’s Present: Bobby Alpert’s Clash with Open Outcry Trading and Social Media


Not everyone who participated in the open outcry markets looks back on those days with fondness, or likes to be reminded of them by seeing the videos from The Open Outcry Traders History Project. Case in point is Bobby Alpert, former CME broker and local, half-brother of Barry Lind and one of the administrators of a CME-themed Facebook group. I have been suspended from the Facebook group “Chicago Mercantile Exchange Friends” until June 14, 2024 by one of the administrators. I can only guess it is Alpert, with whom I have previously clashed on other CME-themed Facebook groups. Alpert has expressed his disdain and boredom multiple times upon seeing me post videos from The Open Outcry Traders History Project on Facebook.

To read the rest of this commentary, go HERE

Lead Stories

E*Trade Considers Kicking Meme-Stock Leader Keith Gill Off Platform; Morgan Stanley’s trading platform discusses concerns about possible manipulation in GameStop
AnnaMaria Andriotis – The Wall Street Journal
E*Trade is considering telling meme-stock leader Keith Gill he can no longer use its platform after growing concerned about potential stock manipulation around his recent purchases of GameStop options, according to people familiar with the matter. Shortly before Gill reignited a meme-stock craze in May, he bought a large volume of GameStop options on E*Trade, the people said. This week, Gill posted screenshots of an E*Trade account showing he owns GameStop shares now valued at $140 million and a new set of options that expire later this month. His total gains on the positions were at $85.5 million, he posted late Monday, showing his account remained in operation.

Roaring Kitty’s GameStop options up millions, but cashing in may be tricky
Saqib Iqbal Ahmed – Reuters
“Roaring Kitty” Keith Gill, the stock influencer behind the 2021 meme stock frenzy, may be sitting on a paper profit of tens of millions of dollars on his position in GameStop options, but reaping those gains might not be easy. GameStop soared 21% on Monday after Gill’s Reddit account posted a screenshot showing a $116 million bet on the embattled video game retailer. The post, the first from the account in three years, also showed a position of 120,000 GameStop June 21 call options at a strike price of $20, worth $65.7 million at Friday’s close. Call options convey the right to buy shares at a fixed price in the future.

Short Sellers in Danger of Extinction After Crushing Stock Gains; The business of betting on stock declines is shrinking as bearish investors face threats on all sides.
Denitsa Tsekova and Carmen Reinicke – Bloomberg
Jim Chanos quit after failing to raise capital. Carson Block’s firm launched its first long-only fund. Andrew Left dubbed his kind “a dying breed.” These are bad times to be a bear on Wall Street. After taking hits on multiple fronts, short sellers – who borrow and then sell stocks in a bid to profit from price declines – are in retreat. Thank the gravity-defying bull market, lingering regulatory threats, a day-trading horde randomly squeezing shares like GameStop Corp. ever higher, and more.

Ether options’ implied volatility outpaces bitcoin options as traders eye spot ETFs rollout
Brian McGleenon – The Block
The higher implied volatility in ether options compared to bitcoin options indicates that traders are anticipating increased price fluctuations for ether, possibly in response to the upcoming launch of a spot ETH exchange-traded funds, analysts say.
According to a report from QCP Capital on Tuesday, anticipation surrounding the upcoming launch of spot ether ETFs is currently the main driver of the cryptocurrency market, and this is reflected in the implied volatility (IV) of ether options, which is significantly higher than the IV for bitcoin. Implied volatility in this case is market’s forecast of a likely movement in price for ETH.

Hedge fund short sellers burnt by flurry of UK takeover bids; Managers scale back or ditch bets against London-listed stocks after M&A activity drives sharp share price rises
Costas Mourselas – Financial Times
Hedge funds are increasingly wary of betting against UK stocks after being burnt by a wave of takeover bids at companies targeted by short sellers. Millennium Management, GLG and Gladstone Capital Management are among funds to have been caught out in recent weeks as stocks such as fund supermarket Hargreaves Lansdown, cyber security provider Darktrace and video game services company Keywords Studios soared after attracting offers.

Beyond the Data: Algo providers successfully address hedge funds’ cost concerns but execution performance is declining; In the build up to the 2024 iteration of The TRADE’s Algorithmic Trading Survey, Hedge Funds, Claudia Preece takes a deeper look at last year’s findings which saw execution performance experience the largest year-over-year decline in terms of ratings from users of any category, falling 1.60, while ‘better pricing’ jumped from 7.36 to 8.25.
Claudia Preece – The Trade
The shift of hedge funds’ algo priorities indicates the advent of a new normal as for the first time, cost took precedent over execution performance. With the relationship between hedge funds and algos evolving at a rapid pace, key priorities are shifting. For the first time, The TRADE’s 2023 Algorithmic Trading Survey, Hedge Funds saw ‘consistency of execution performance’ drop out of the top five best rated aspects of algo usage, replaced by ‘cost’.

Mexican Peso Volatility Soars as Traders Fear Additional Losses; Implied volatility rises to the highest level in nine months; Risk reversal reaches 4.1%, signaling demand for USD calls
Davison Santana – Bloomberg
Mexican traders rushed to seek protection in currency options after the overwhelming victory of the ruling party Morena on Sunday. Implied peso volatility soared to the highest level since October.
Demand for options pushed the one-month gauge to over 16%, up from 9.2% less than a week ago. The Mexican peso now has the highest implied volatility among 16 main currencies and the second highest among all 31 major currencies tracked by Bloomberg, trailing only the Russian ruble.


OCC May 2024 Monthly Volume Data

CME Group Reports Record May ADV of 26 Million Contracts
CME Group
Record May interest rate ADV, with all-time highest daily U.S. Treasury volume on May 28. Record May metals ADV. International volume up 12% year-over-year.CME Group, the world’s leading derivatives marketplace, today reported its May 2024 market statistics set a new average daily volume (ADV) record of 26 million contracts for the month, up 4% from May 2023. The company’s interest rate and metals products also reached May ADV records, as its deeply liquid U.S. Treasury complex hit a new single-day record of 34,350,339 contracts on May 28.

Farmer sentiment recovers in May; interest in solar leasing rising
CME Group
U.S. farmers’ outlook improved in May as the Purdue University/CME Group Ag Economy Barometer index rose to 108, marking a 9-point increase from April. Both of the barometer’s subindices saw increases, with the Index of Future Expectations climbing 11 points to 117 and the Current Conditions Index rising 6 points. The rise in crop prices played a role in boosting farmer sentiment this month. By mid-May, Eastern Corn Belt cash corn prices had increased by 6% to 7%, and soybean prices had risen by 2% to 3% since the April survey was conducted. The improvement in prices aligned with good corn and soybean planting progress, which likely contributed to the sentiment improvement. This month’s Ag Economy Barometer survey was conducted from May 13-17, 2024.

Cboe: Technology, Education Spurred Retail Investor Trading
Bloomberg (Video)
Cboe Global Markets President David Howson discusses the return of meme-stock trading and Cboe’s business strategy on “Bloomberg: The China Show.” He speaks with Shery Ahn, David Ingles and Yvonne Man from the sidelines of the S&P Dow Jones Indices Annual Japan ETF Conference.

NYSE American Options resolves market data technical issue
NYSE American Options said on Tuesday it had resolved a proprietary market data issue that had impacted a subset of symbols on a trading unit for about 15 minutes.

Regulation & Enforcement

DMIST Publishes Final Standard for Average Pricing
FIA and DMIST, the Derivatives Market Institute for Standards, jointly announce today the publication of the Average Pricing Standard.
This second standard published by DMIST supports the final standard for Improving Timeliness of Trade Give-ups and Allocations (30/30/30) released in June 2023. The lack of standardized average price functionality across CCPs was cited as one of the issues that prevents processing trades on Trade Date.
This Average Pricing Standard calls for Central Counterparties (CCPs) globally to adopt certain minimum standard average pricing functionality. Standardized functionality will help drive consistency and improve the current allocation and timing issues associated with average price order workflows.

Italian regulator fines Dutch high-speed traders over short selling Saipem; Consob issues combined EUR4.7mn fine against Optiver and Flow Traders after oilfield engineer’s botched 2022 capital raising
Silvia Sciorilli Borrelli – Financial Times
Italy’s financial regulator has penalised two Dutch high-speed traders for illegally short selling shares in Saipem after the oilfield engineer botched a EUR2bn fundraising in 2022. Consob on Tuesday said it had issued combined fines of EUR4.7mn and ordered the return of the EUR4.9mn in total profits made by Amsterdam-based Optiver and Flow Traders for so-called naked short selling, where traders bet on stocks falling without borrowing them in advance. The practice is banned in Europe and the US.


Goldman Family Office Clients Eye Exotic Puts as Election Hedge; Look-back puts are a way to navigate volatility, Goldman says; Wealth-management executive sees ‘concern across the board’
Benjamin Stupples – Bloomberg
Goldman Sachs Group Inc.’s family office clients are considering exotic options called look-back puts as a way to navigate volatility ahead of this year’s US elections, according to a senior executive at the Wall Street giant.
“There is concern across the board on US elections for family offices,” Sara Naison-Tarajano, global head of private wealth management capital markets, said in a webinar Tuesday. “We’ve been spending time on derivatives strategies like look-back puts.”

Stock Pickers Defy Wall Street Norm to Risk It All on a Few Bets; ETFs with concentrated equity holdings are gaining converts; High-risk strategy proves tempting amid winner-takes-all rally
Katie Greifeld – Bloomberg
For active managers who spread out their bets across the world’s largest stock market, these are harsh times on Wall Street.
A historically small number of Big Tech firms keep driving equity indexes to new highs — in an era when cheap passive funds are grabbing billions of dollars in fresh capital and netting big gains by simply tracking the benchmark.

Cboe (Video)
Watch today’s #Vol411 for coverage from Tim Biggam @delta_desk on the $VIX Index put/call ratio so far today, the #VIX futures term structure, the 15-day straddle and more.


Who Is Keith Gill? The Meme Lord Is Back; Amateur investor who turned GameStop into a phenomenon has revealed a monster stake in the company worth $260 million
Gunjan Banerji – The Wall Street Journal
Posting memes online can make you really, really rich. That is, if you are Keith Gill, the leader of the GameStop revolution.
After re-emerging on X last month for the first time in three years, Gill finally revealed his hand. He posted a screenshot of his brokerage account on Reddit that showed a $260 million position in GameStop as of Monday afternoon.

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