Hedge Funds to Option Traders Still Have Room to Bet Against Japanese Yen

Jun 9, 2022

Observations & Insight

ICE’s Elizabeth King Breaks Down OIC Diversity and Inclusion Panel, Talks ICE Progress

JLN interviewed Elizabeth King, president, ESG & chief regulatory officer of Intercontinental Exchange, at the 2022 Options Conference in San Antonio, Texas, about how her panel at the conference went, the subjects they discussed and other related topics.

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Lead Stories

Hedge Funds to Option Traders Still Have Room to Bet Against Japanese Yen (JPY)
Ruth Carson and Cormac Mullen – Bloomberg
Speculators are gathering around the beleaguered yen and positioning is by no means extended, suggesting there’s still room for bears to pile in.
With Japan’s currency just a whisker away from breaking down to a 24-year low, position data from hedge funds to option traders are nowhere near historic levels. Citigroup’s ‘pain’ index for the yen — a gauge of trader positioning — is well off the lows of the year.

Gensler’s gambit
Financial Times
The Securities and Exchange Commission yesterday unveiled a far-reaching plan to “do better” for retail investors. Collectively, it looks like a pretty radical plan that is going to piss off a lot of people.
Setting aside the fact that things have arguably never been better for US retail investors — with free trading and near-free index funds — it’s long been clear that the SEC at least has to do something, even if it is just to counter the widespread view that “markets are rigged”.

JPMorgan Strategists Say Equities Are Flashing a Bullish Signal
Sagarika Jaisinghani – Bloomberg
Stock markets are flashing a bullish signal amid tentative signs that inflation volatility is peaking, according to JPMorgan Chase & Co. strategists.
As fears about hawkish central banks and a potential recession sparked a rout in US stock markets this year, the put to call open interest of S&P 500 options collapsed as demand for hedging subsided, strategists led by Nikolaos Panigirtzoglou wrote in a note on Wednesday.

Even if stocks break out, the overwhelming trend is down
Lawrence G. McMillan – MarketWatch
The stock market, as measured by the S&P 500 Index SPX, -0.99%, has traded within a small range — these days, 100 points is a small range — in a volatile fashion since May 27.
That range is roughly 4070 to 4170 points. A breakout in either direction would likely generate follow-through.

European Central Bank will hike interest rates by 25 basis points and end its bond-buying program in July
George Glover – Business Insider
The bank also said it plans to end its 20-billion-euros a month bond-buying program next month.The ECB is tightening its monetary policy to try to tame inflation, which hit a record 8.1% last month.

Tech’s Decade of Stock-Market Dominance Ends, For Now
Gunjan Banerji – WSJ
Big technology stocks are in the midst of their biggest rout in more than a decade. Some investors, haunted by the 2000 dot-com bust, are bracing for bigger losses ahead.
The S&P 500’s information-technology sector has dropped 20% in 2022 through Wednesday, its worst start to a year since 2002. Its gap with the broader S&P 500, which is down 14%, is the largest since 2004. The declines have prompted investors to yank a record $7.6 billion this year from technology-focused mutual and exchange-traded funds through April, according to Morningstar Direct data going back to 1993.

Regulation & Enforcement

Lummis-Gillibrand Crypto Bill Welcomed
Shanny Basar – MarketsMedia
Kristin Johnson, Commissioner at the Commodity Futures Trading Commission, said the framework for crypto regulation introduced by Senators Kirsten Gillibrand and Cynthia Lummis has done a good job of navigating between the responsibilities of the CFTC and the Securities and Exchange Commission.
Johnson spoke at the IDX conference hosted by FIA, the trade organization for futures, options and centrally cleared derivatives in London on 8 June.

What SEC Chief Gensler’s plan to tweak payment for order flow means for everyday investors
Andrew Keshner – MarketWatch
When the GameStop stock trading frenzy of early 2021 morphed into a widely-watched story about the fairness — or the perceived lack of it — to retail investors trying to play the stock market, threats of recession, hot inflation and bear markets were far away.
But after Securities and Exchange Commission Chairman Gary Gensler unveiled a slew of possible reforms on Wednesday related to the ways trades get carried out, retail investor advocates say the changes are no less necessary.

SEC Investigating UST Stablecoin Blowup in Fresh Threat to Terra
Matt Robinson – Bloomberg
The US Securities and Exchange Commission is investigating whether the marketing of the TerraUSD stablecoin before it crashed last month violated federal investor-protection regulations, according to a person familiar with the matter.


Should You Buy Tesla Stock? The Best Way to Play Shares Now.
Steven M. Sears – Barron’s
It’s hard to predict the future, but one thing is almost certain: Electric cars will be more popular tomorrow than they are today. The recent surge in oil and gas prices will likely cause seismic shifts in consumer demand and vehicle preferences. Many people are paying almost double what they did a year ago to fill up their cars and trucks.


China’s FDL – Overview and Insights
China’s Futures and Derivatives Law (FDL) is a historic development, being the first law in China regulating futures and derivatives trading at a national legislative level. It establishes a legal framework for the development of the futures and derivative markets and introduces a unified set of rules that are expected to pave the way for significant changes in the market.
In this webinar, we invite Linklaters Zhao Sheng to provide a regulatory overview of China’s futures market. In addition to addressing key threshold questions for futures clearing under the FDL and issues around client protection, they will also provide insights on licensing requirements and other issues around cross-border trading. We will also seek their views on the broader implications of the FDL, including how market participants and regulators are expected to approach developments under the FDL.

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