Observations & Insight
The Spread: Boca On-Demand
This week on The Spread, FIA hosts a virtual version of Boca, Bill Brodsky and Steven Sears start an options-focused asset management firm, and more.
Eurex Derivatives Forum: Fixed Income Looks For a Recipe For ESG Success
Suzanne Cosgrove — John Lothian News
Sustainable investments are new by most measures. This is especially true in the fixed-income sector, where ESG products are in their infancy and clients tend to be more conservative investors, according to members of a panel who addressed the issue on Wednesday at the Eurex Derivatives Forum.
Live-streamed from Frankfurt, the discussion had a decidedly European flavor. The EU has imposed deadlines to reach sustainability goals and many firms are struggling to become compliant with ESG principles.
“ESG is on everybody’s mind,” said Lee Bartholomew, head of fixed-income derivatives product research and development at Eurex. “It comes up at every meeting.”
To read the rest of this story, go here.
Fear Is Everywhere in Volatility Market Even as the VIX Retreats
Yakob Peterseil – Bloomberg
The Cboe Volatility Index may have just wiped out the pandemic-induced doom and gloom, but Munich money managers Daniel Danon and Tobias Knecht are fretting over the warning signs still flashing across the stock market’s underbelly.
The recent decline in the Wall Street fear gauge to pre-virus levels belies the “tension beneath the calm” within the volatility landscape, according to the traders at Assenagon GmbH with 27 billion euros ($32 billion) under management.
Bitcoin Options Traders Position for Gains (to $80K?) in Historically Bullish April
Omkar Godbole – Coindesk
Some bitcoin options traders are betting that this year’s price rally, which paused in recent weeks, will resume in April – historically a strong month for the market. Among options listed on the dominant Deribit exchange with an April 30 expiry, the most common open position is the $80,000 call, data shared by the options analytics platform Laevitas shows. Deribit is the world’s largest crypto options exchange by trading volumes and open interest. That’s a sign of high price expectations for April, as noted on Twitter by on-chain analytics firm Glassnode founders Jan Happel and Jann Allemann. Bitcoin is currently changing hands around $53,000, up 83% on the year. But the market has stagnated since reaching an all-time high above $61,000 on March 13.
Retail Trader Army Is Signaling Retreat on Latest Stimulus Wave
Justina Lee – Bloomberg
Declines of Reddit favorites signal fading speculative force; Falling popularity of the Robinhood app is among the signs
From bullish options to basketball trading cards, the multibillion-dollar retail frenzy is showing signs of fading. Just as $1,400 stimulus checks arrive all across the U.S., day-trader favorites are losing steam, stirring speculation that the army of individual investors who disrupted markets over the past year have opted to spend the cash on plane tickets and restaurants rather than their trading apps.
Oil Drops in Volatile Week While Suez Canal Blockage Persists
Andres Guerra Luz – Bloomberg
Oil dropped as a broader market decline and mounting lockdowns in Europe blunted the potential impact of crude cargoes backing up outside the blocked Suez Canal.
Futures fell as much as 6.1% in New York on Thursday in the wake of declining equities and a stronger U.S. dollar, which reduces the appeal of commodities priced in the currency. Meanwhile, work to refloat the massive ship that’s stuck in the canal — a key trade route for crude flows — continued without success on Thursday in Egypt.
Why Did GameStop Stock Price Fall? Its Earnings Report Mattered After All.
Connor Smith – Barron’s
GameStop stock was falling fast on Wednesday after the company’s fiscal fourth-quarter results disappointed analysts. There’s also another elephant in the room: The company is considering selling more stock, which could dilute its shares.
GameStop stock (ticker: GME) closed down 33.8%, at $120.34. The S&P 500 index fell 0.6%, while the Dow Jones Industrial Average ended flat.
Exchanges and Clearing
Increase of Spot Month Position Limits and Accountability Levels of Six (6) European Natural Gas Futures and Option Contracts
Effective with the May 2021 contract month and beyond, the New York Mercantile Exchange, Inc. (“NYMEX” or “Exchange”) will increase the spot month position limits for four (4) physically delivered European Natural Gas futures and option contracts from 6,000 to 50,000 futures contract equivalents. Additionally, the Exchange will increase the spot month position limits for two (2) financially settled European Natural Gas futures contracts from 1,450 to 12,000 futures contract equivalents as noted below and in Exhibit A of NYMEX Submission No. 21-120. Please note that the spot month limits in the April 2021 contract month are unchanged.
Intercontinental Exchange approves 24 members ahead of ICE Futures Abu Dhabi launch
The Intercontinental Exchange has approved 24 exchange members, of which 18 will be clearing members for ICE’s new exchange in Abu Dhabi.
Bringing together a global community: the Derivatives Forum Frankfurt 2021
The fourth edition of Eurex’s Derivatives Forum took place virtually from 23 to 24 March and was packed with debate, exchange and thought leadership. The Derivatives Forum has quickly grown to become Europe’s leading event covering not just derivatives trading and clearing, but a range of related financial market topics such as repo, collateral management and asset allocation. The event was kicked off with a welcome from CNBC’s Annette Weisbach – who also moderated a range of panels across the event – and an opening address from Eurex CEO Michael Peters. Peters reinforced both the Derivatives Forum’s global scope – the event received over 3,000 registrations from around the world – as well as the importance of Frankfurt as a financial center. Indeed, as Peters said, “it’s fair to conclude that Frankfurt has the strong support of the international finance community as a globally recognized hub for derivatives trading, as well as risk and collateral management”.
Regulation & Enforcement
SoftBank is under investigation by the SEC following its risky ‘Nasdaq whale’ investments
Tyler Sonnemaker – Markets Insider
The Japanese investing conglomerate SoftBank, which has holdings in household names like Apple, Amazon, Tesla, Uber, DoorDash, and Sprint, is under investigation by the Securities and Exchange Commission, Vice News reported Wednesday.
Jane Street Poaches Senior Volatility Trader Katzman From Barclays
Alex Morrell – Business Insider
Quant trading firm Jane Street has poached a senior equity derivatives trader from Barclays to focus on the swings of individual stocks that have catalyzed markets thus far in 2021.
Aaron Katzman is joining Jane Street as a single-stock options trader, according to sources familiar with the matter. A Barclays lifer, Katzman joined the bank in 2008 and rose to managing director on the equity volatility desk, with a focus on tech stocks, the sources said.
Cboe Appoints Bryan Harkins as President of BIDS Trading, Announces Planned Retirement of Tim Mahoney
Traders Magazine (press release)
Cboe Global Markets, Inc. , a market operator and global trading solutions provider, today announced the planned retirement of Tim Mahoney, President of BIDS Trading, from the company. Bryan Harkins, Executive Vice President and Head of Markets at Cboe Global Markets, has been appointed his successor and will assume the role of President of BIDS Trading, effective immediately.
If You’re Sitting on Huge Gains, Consider This Options Strategy
Steven M. Sears – Barron’s
If you’re like most investors, you’re probably sitting on significant unrealized gains in your stock portfolio. But you don’t necessarily have to sell shares—and forfeit your exposure to future upside—in order to realize them.
Instead, there’s an options strategy that can help you take some money off the table while staying in the game.
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.
Date May. 10, 2021 12:00pm – May. 14, 2021 2:00pm
Location Virtual Live. 2-hour sessions over 5 days.
Class size registration is limited to approximately 20 participants to promote student participation and interaction.
A New Virtual Experience
The Options Industry Conference is Going Virtual in 2021. Join OCC and the options exchanges for the 39th annual Options Industry Conference, April 28-29, 2021. While the conference will be held virtually for the first time in history, the focus will continue to be the key topics facing the options industry today, from the regulatory shifts in the U.S. and Europe to the technological developments that are driving monumental change in markets around the globe.
DOJ enforcement priorities in commodities & derivatives markets: A discussion with DOJ leadership
13 April 2021 • 1:00 PM – 2:00 PM ET
During this discussion, James McDonald, Sullivan & Cromwell Partner, will interview Robert Zink, U.S. Department of Justice, Acting Assistant Attorney General (and Chief of the DOJ Fraud Section from January 2019 to August 2020), regarding DOJ’s enforcement priorities in the commodities and derivatives markets and white collar area more generally.
GameStop investor ‘Roaring Kitty’ reported a $9 million hit to his fortune after the stock crashed 34% on Wednesday
Theron Mohamed – Markets Insider
Keith Gill, the retail investor who became a millionaire by betting on GameStop, apparently saw $9 million erased from his fortune in a single day this week.
In 2020 the ultra-rich got richer. Now they’re bracing for the backlash
Brenna Hughes Neghaiwi and Simon Jessop – Reuters
In 2020, as the world convulsed under COVID-19 and the global economy faced its worst recession since World War II, billionaires saw their riches reach new heights.
Now some are talking to their wealth managers about how to keep a hold of and consolidate their fortunes amid the global debris of the pandemic. Others are discussing how to preempt and navigate demands from governments, and the wider public, to pick up their share of the recovery costs.
How 54 Markets Have Performed Since The March 2020 Covid Lows
RCM Alternatives blog
One year ago – where were you? Doing cool zoom backgrounds. Stacking a pile of books to act as your at home standing desk. Home schooling!! Trying to understand what a VIX of 80 means? We were all trying to get a handle on just what the new normal would be, and if our economies were really going to be shut down, and a little scared not just for our investments, but for our lives. But the ‘waters receded’, to quote fake president Morgan Freeman from Deep Impact: