Observations & Insight
Suzanne Cosgrove Accepts New Role, Leaves JLN for PR Agency; Will Become JLN Consultant and Advisory Committee Member
Alex Perry Promoted from Intern to Associate Editor
By John J. Lothian – John Lothian News
JLN Deputy Managing Editor Suzanne Cosgrove gave her notice to John Lothian News and accepted a position with Purpose Brand, a woman-run, Chicago-based PR, brand, and digital marketing company that’s all about diversity and inclusion and seeks to expand its coverage of financial firms. She leaves JLN at the end of the year and starts her new position on January 3, 2022.
Suzanne joined JLN after having been part of the communications team at Cboe for the previous five years. She also spent 10 years at the Chicago Tribune, and it was a former colleague at the paper that recommended her for the new job, for which she was recruited.
To read the rest of this announcement, go here.
Oil Bounces After Omicron-Triggered Flash Crash; VIX Options Trade Surges; OCC Options Volumes Reach Record Highs – The Spread – December 3, 2021
— Stock market volatility gets renewed boost as new Covid-19 variant gains foothold; VIX trading, benchmark index up, options totals surge;
— John’s Take: This week’s Nasdaq, AWS deal sends more exchanges into the Cloud;
— Jermal Chandler breaks down the formula for put/call parity in the latest ‘Term’
Goldman Sachs Sees Crypto Options Markets as ‘Next Big Step’ for Institutional Adoption; While CME Group’s bitcoin futures contracts initially lured in Wall Street firms, Goldman’s head of crypto trading says options are “more versatile.”
Tracy Wang – Coindesk
Goldman Sachs, the Wall Street heavyweight, says the next major development for cryptocurrencies will be more liquid options markets as more traditional financial firms pile into the rapidly growing asset class.
Hedge Funds Caught Massively Offside During Last Week’s Turmoil
Tracy Alloway – Bloomberg
Talk about bad timing.
Speculators were caught offside in both bonds and stocks last week, increasing their bets against U.S. Treasuries and buying more equity exposure right before a bout of volatility caused the exact opposite moves.
Gartman Says ‘Bear Market Is Required’ as Stocks Over-Valued
Peyton Forte and Nathan Hager – Bloomberg
U.S. equities investors, having enjoyed a lengthy run of rich valuations during the course of the pandemic, need to pull back, especially from growth stocks as the Federal Reserve begins to tighten monetary policy, according to Dennis Gartman, University of Akron Endowment Chairman.
“A bear market is required at this point,” Gartman said Monday on Bloomberg Radio. “We had an expansion for a long period of time and I think over the course of next year, he or she who loses the least amount of money will be the winner.”
Treasury liquidity is getting worse as Fed scales back buying
Liz McCormick and Edward Bolingbroke – Bloomberg
Buying and selling large quantities of U.S. government debt without substantially moving the market is about the hardest it’s been since the pandemic sent markets reeling in March 2020. Volatility has jumped, failed trades have increased — and Wall Street analysts warn that the Federal Reserve’s exit from bond-buying is set to make matters worse.
When markets seized up last year, liquidity in most Treasuries vanished, forcing the Fed to embark on massive asset purchases and other measures to avert a full meltdown. Now, the U.S. central bank is scaling back that buying, which has targeted the least-liquid Treasuries, and is poised to quicken the wind-down. At the same time, new government borrowing is ebbing, with the combination setting the stage for more fireworks.
US stock futures struggle as Omicron stays in the driving seat, while bitcoin keeps sliding after a weekend rout
Shalini Nagarajan – Markets Insider
US stocks struggled to hold onto early pre-market gains Monday, as volatility driven by news around the Omicron coronavirus variant continued, while bitcoin kept slipping after a weekend battering and oil rebounded after a Saudi price rise.
Encouraging reports about the effects of the Omicron coronavirus variant had calmed some nerves earlier, but news of rising cases revived jitters. Concerns about Federal Reserve tightening and Chinese property sector risks also weighed on stocks.
Wall Street stocks tick higher after volatile week
Naomi Rovnick – Financial Times
Wall Street equities rose on Monday, following falls in the previous session, as debate about the Omicron coronavirus variant and the future direction of monetary policy kept trading conditions volatile.
The broad-based S&P 500 index added 1.1 per cent, after closing down 0.8 per cent on Friday. Travel-related stocks rallied strongly, with shares in United Airlines, American Airlines, Royal Caribbean Cruises and Carnival all rising by around a tenth.
Hedge Funds Suffer Big Losses on Biotech Rout
Gregory Zuckerman and Juliet Chung – WSJ
Biotech stocks have fallen to earth with a thud in 2021 after soaring last year amid excitement over the development of Covid-19 vaccines, dealing big losses to some hedge funds.
The sector is being buffeted by concerns Congress will move to put a lid on drug pricing and a surfeit of early-stage biotech shares as the IPO market booms.
Oil market hit by wave of hedge fund liquidation
John Kemp – Reuters
Fears over the Omicron coronavirus variant’s impact on international aviation and other sources of oil demand have prompted massive liquidation of previously bullish hedge fund positions.
Hedge funds and other money managers sold the equivalent of 131 million barrels in the six most important petroleum futures and options contracts in the week to Nov. 30 (https://tmsnrt.rs/31wlm1Q).
Cboe Global Markets Reports November 2021 Trading Volume
Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, today reported November 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 November and year-to-date 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.
LSEG to acquire Quantile Group Limited
London Stock Exchange Group plc
London Stock Exchange Group plc (“LSEG” or the “Company”) today announces that it has agreed to acquire Quantile Group Limited (“Quantile”) (the “Transaction”). Quantile is a leading provider of portfolio, margin and capital optimisation and compression services for the global financial services market. Quantile’s powerful optimisation engine provides advanced trade compression and risk rebalancing services to banks, hedge funds and other financial institutions trading OTC derivatives. Quantile was founded in 2015 and is led by a team of industry experts with significant experience in risk management, quantitative analysis and trading technology.
OCC Chief External Relations Officer Julie Bauer Receives STA Women in Finance Mentor of the Year Award
On December 8, the STA Foundation will present a virtual ceremony honoring recipients of the 2021 Women in Finance Awards. OCC’s Chief External Relations Officer, Julie Bauer, is one of three recipients of the Mentor of the Year Award, which recognizes women who serve as role models, leaders and advocates for women in finance.
The STA Women in Finance Awards celebrate individuals for their contributions to the advancement of women in finance through diversity and inclusion leadership, advocacy and mentorship efforts. Learn more about the STA Women in Finance Awards and see the full list of recipients by visiting the STA website.
CME Group Announces Launch of Micro Ether Futures
CME Group, the world’s leading and most diverse derivatives marketplace, today launched Micro Ether futures, further expanding its suite of cryptocurrency derivatives offerings, and marking its second micro cryptocurrency product this year.
“The launch of Micro Ether futures underscores the significant growth and liquidity we have seen in our cryptocurrency futures and options,” said Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products. “Sized at one-tenth of one Ether, Micro Ether futures will provide an efficient, cost-effective way for a range of market participants – from institutions to sophisticated, active, individual traders – to hedge their spot Ether price risk or more nimbly execute Ether trading strategies, all while retaining the features and benefits of CME Group’s larger-sized Ether futures.”
Dalian exchange studying new contracts of North-east Asia crude to shipping futures: state media
[BEIJING] China’s Dalian Commodity Exchange will develop commodities derivatives related to trade, shipping and logistics in North-east Asia, including studying the feasibility of a North-east Asia crude oil futures contract, an exchange official told a state-run media house on Monday (Dec 6).
“(The Dalian exchange will) promote the formation of a new international and integrated development of bulk commodity and derivatives markets in Northeast Asia centered on Dalian,” Ran Hua, the exchange’s secretary, said in an interview with state-run Shanghai Securities News.
China currently has crude oil futures and options on the Shanghai International Energy Exchange, which is open to foreigners for trade.
Nodal Exchange Achieves Trading Records in Power, Natural Gas and Environmental Markets in November With Over 100% Growth
Nodal Exchange today announced new volume and open interest records in its power, natural gas and environmental markets. In power, Nodal set a calendar month trading record in November 2021 with 245 million MWh of power futures volume traded, representing a record 47.3% market share and a growth rate of 140% over November 2020. Nodal continues to be the market leader in North American power futures having the majority share of the open interest with a record 1.156 billion MWh at the end of November. The open interest represents over $108.7 billion of notional value (both sides).
MCX to launch nickel options contract on December 13; details here
Manisha Gupta – CNBC-TV
Multi Commodity Exchange (MCX) will be launching nickel options contract on 13th of December.
In an interview to CNBC-TV18, Rishi Nathany, Head of Business Development & Marketing at MCX said, the new product will suit all participants, be it investors, traders or hedgers.
MCX already has options contracts for gold, silver and crude.
Follow the moneyness
Barclays quants extend Bergomi’s skew stickiness ratio to all strikes
Mauro Cesa – Risk.net
Like their peers at most major banks, equity derivatives traders at Barclays rely on the skew stickiness ratio (SSR) to monitor the correlation between implied volatility and spot prices – a crucial factor when managing options portfolios. Introduced by Lorenzo Bergomi in 2009, the SSR is defined as the regression coefficient of the at-the-money (ATM) forward volatility with respect to the spot price, normalised by the ATM forward skew. More loosely, it is a measure of the covariance between the spot price and the ATM forward volatility.
Grain investors race for the exits amid fresh virus panic
Karen Braun – Reuters
An abrupt commodity selloff right after the Thanksgiving holiday had speculators and especially index traders dumping their positions in Chicago grains and oilseeds, but market participants retain relatively bullish views after an uptick late last week.
Fears surrounding a new coronavirus variant rattled both grain and outside markets just over a week ago, and that was immediately after traders had piled into CBOT grains, largely as a hedge against escalating inflation.
The January Effect and Year-End Options Strategies Registration
The January Effect and Year-End Options Strategies
air Date:December 15, 2021
Start Time:12:00 pm eSt
This webinar explores the January Effect and Year-End Options Strategies.
Retail Traders Trail Professional Stock Pickers by Most Ever
Elena Popina – Bloomberg
Individual investors, who reaped eye-popping returns that made some pros chuckle earlier this year, are facing a moment of reckoning.
The obsession with risk-on assets — short-handed by the term YOLO for “you only live once” — was a blessing for amateur traders during the meme-stock craze. Well, it’s since turned into a curse as the going got rough in every nook of the stock market last week. A basket of the 50 most-popular stocks among individual investors plunged 7.8% last week, trailing companies most-favored by mutual funds by 5.8 percentage points, the most ever, data compiled by Goldman Sachs Group Inc. show.