How Bullish Are Investors on Nvidia Now? Options Offer a Clue

Nov 20, 2023

Lead Stories

How Bullish Are Investors on Nvidia Now? Options Offer a Clue
Charley Grant and Gunjan Banerji – The Wall Street Journal
Nvidia shares have been flying higher ahead of the company’s earnings, which are due Tuesday.
One clue from the options market indicates investors aren’t quite as euphoric as they were a few months ago.

Bitcoin Options Open Interest Climbs to Record $15B on Crypto Exchange Deribit
Omkar Godbole – CoinDesk
The notional open interest in BTC options listed on Deribit rose to a record $15 billion last week as traders scrambled to take bullish exposure.

Short-seller Jim Chanos, who cashed in by betting on Enron’s infamous collapse, to close his hedge funds after 38 years
Hema Parmar & Bloomberg via Fortune
Jim Chanos, the legendary short-seller known for his bearish bets against Enron and Tesla, is shuttering his hedge funds after almost four decades. Chanos & Co., which he founded as Kynikos Associates in 1985, plans to return capital to investors by the end of the year, according to a letter to clients Friday.

S&P 500 to Flirt With Record High in Bumpy 2024 Ride, SocGen Says; Improving profit indicators will push stocks higher, firm says
Alexandra Semenova – Bloomberg
The S&P 500 Index is set to rise toward its all-time high early next year, pullback midyear and then rally back toward the highs, according to strategists at Societe Generale SA.
A team led by Manish Kabra sees the benchmark for US equities jumping toward 4,750 in the first quarter and then dropping to 4,200 mid-year as a mild recession ensues. That 12% drop will mark a buying opportunity, the firm said, as the Federal Reserve cuts interest rates, sparking a modest economic recovery that propels the index back to 4,750 in the final three months of the year. It rose 0.4% on Monday to 4,533 as of 12:45 p.m. in New York.

Brace for constant volatility as high interest rates amplify the US debt problem, BlackRock says
Jennifer Sor – Business Insider
The new market regime will be marked by constant volatility, BlackRock strategists wrote in a note, as higher-for-longer interest rates will exacerbate the issues with Americas massive debt pile.

The stock market has rallied 63 times after a correction. Why this time is different, says Deutsche Bank.
Steve Goldstein – MarketWatch
It’s probably going to be a quiet week except in the world of artificial intelligence, where the soap opera around ChatGPT maker OpenAI plays out ahead of Nvidia results on Tuesday. More on that later.
November has proved to be a terrific month for the stock market, even compared to the usual good cheer that the 11th month brings. The 7.6% advance for the S&P 500 SPX this month is on track for the best November performance since the 10.8% surge in 2020, back when Pfizer announced that the coronavirus vaccine was effective.

US crude oil bears risk reversal from crowded trade
John Kemp – Reuters
Investors have rarely been more bearish about oil prices as a slowing economy and an increase in non-OPEC output lead them to conclude OPEC? production cuts will not prevent a rise in inventories.
Hedge funds and other money managers sold the equivalent of 7 million barrels in the six most important petroleum-related futures and options contracts over the seven days ending on Nov. 14.


CME Group set to launch euro STR options next quarter; Launch follows the addition of overnight index futures based on the euro short-term rate at CME Group in October last year.
Wesley Bray – The Trade
CME Group has announced that it will launch options on euro STR futures in Q1 2024, which will be listed by and subject to the rules of CME. In October last year, CME Group announced the first day of trading of a new set of overnight index futures based on the euro short-term rate. The contracts allow for a more efficient means of hedging European money market rates, enabling price discovery across the forward curve, IBOR/OIS basis trading and managing cross-country basis spreads and price differentials between EU and US interest rates.

CME Group Adjusted Interest Rate Total Return Futures Reach Record Open Interest, Volume
CME Group
CME Group, the world’s leading derivatives marketplace, today announced that S&P 500 Adjusted Interest Rate (AIR) Total Return futures reached an open interest (OI) record of 414,000 contracts on November 15, surpassing the prior record of 408,000 contracts on November 14.
AIR Total Return futures average daily volume stands at 4,220 contracts for 2023, up a record 54% year over year. Additionally, open interest represents more than $100 billion in equivalent equity index notional value, an increase of 49% year over year.

The Options Industry Council (OIC) Receives 2023 Benzinga Fintech ‘Educational Excellence’ Award
OCC (The Options Clearing Corporation) / The Options Industry Council (OIC) was named to the Benzinga Global Fintech Listmakers and selected as winner of the “Educational Excellence” award.
The Benzinga Global Fintech Awards recognize and awards innovators that create positive and diverse changes in the financial services space. From deeply established companies, to the newest startups, this group is impacting sectors like payments, banking, investing, technology and financial literacy.

Regulation & Enforcement

FIA responds to Bank of England approach to discretionary payments by CCPs
FIA and ISDA have responded to the Bank of England’s proposed statement of policy on discretionary payments by CCPs.
The associations support the proposal and agree that this new power is an important component in the BoE’s supervisory toolkit. They welcome the BoE’s explanation that it will consider the maintenance of public confidence in the UK financial system as part of the public interest when exercising this power.


How a Hack Shook Wall Street’s Multitrillion-Dollar Foundations; The cyberattack on ICBC rekindled investors’ concerns about the repo market
Eric Wallerstein – The Wall Street Journal
The recent hack of a Chinese banking giant reignited Wall Street’s long-running fears of disruptions to the short-term cash markets underpinning the global financial system. Traders swiftly contained the cyberattack on the Industrial and Commercial Bank of China. But some said the incident exposed cracks in the multitrillion-dollar market for repurchase agreements, known as repo, where banks and hedge funds borrow cash mainly using Treasurys as collateral.


Option Volume
Cboe (Video)
In Vol411, Joel Hawthorne @louiswinthrop covers last week’s most active equity options – $TSLA, $NVDA, $MSFT, $AMZN – and looks ahead to notable earnings and economic data coming this week.


A Hedge-Fund Founder’s Obsessive Storytelling; A new book about Ray Dalio, the founder of Bridgewater Associates, paints an unflattering picture-but it’s hard to imagine a record more damning than the one Dalio has created himself.
Tarpley Hitt – The New Yorker
In the spring of 2010, a Web site called Dealbreaker obtained a notable PDF. Dealbreaker was a gossip-and-news blog in the mold of Gawker, focussed specifically on the cartoonish personalities and plotlines that emerged from the world of Wall Street and high finance. This PDF was of particular interest, as it concerned one of the more colorful, idiosyncratic, and egomaniacal figures which that province had yet produced: Ray Dalio, the founder of Bridgewater Associates, one of the largest hedge funds in the world. The document laid out what Dealbreaker called the “Tao of Dalio,” and what Dalio called his “Principles,” a novella-length manifesto that the blog claimed Bridgewater employees were encouraged to read, deploy in their daily lives, and quote from regularly at work.

****** Ray Dalio obsessive? No way!~JJL

Pity Hedge Funds That Lost in Electricity Chaos — No, Really

Pity Hedge Funds That Lost in Electricity Chaos — No, Really

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The Spread

Past Options Newsletters

Firms launch options on swap-based Bitcoin ETF

Firms launch options on swap-based Bitcoin ETF

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