How to Buy and Sell Options Without Making a Fool of Yourself
Steven M. Sears – Barron’s
Anytime nonprofessional investors are part of a major investment trend, Wall Street’s commentariat warns that surging stock prices will soon fall from grace faster than Jerry Falwell Jr. But what really annoys them are the masses horning in on the action.
Sneering at the newly minted Robinhood and Reddit hordes trading options on stocks like Apple (ticker: AAPL), Peloton Interactive (PTON), and Microsoft (MSFT) doesn’t do anyone any good. I prefer to share some tips on how best to play the game.
*****JB: Most of our readers are already pretty savvy options traders, but this list is still worth a read I think.
Stock Market: Did Options Trading Fuel the Market’s Wild Rally?
Michael P. Regan – Bloomberg
There are a few jokes going around Wall Street to explain the wild ride for the U.S. stock market this summer: Why did the huge rally suddenly stall out on Sept. 2? Because all the phone-app day traders had to go back to school. Or maybe because the NFL season (and football betting) was approaching.
Wells Fargo says stock market volatility will balloon after US election
Saloni Sardana – Markets Insider
The stock market should prepare for ample amounts of volatility post Election Day, Michael Schumacher, head of rates strategy at Wells Fargo, told CNBC’s “Trading Nation” Tuesday.
“Normally, you might think that it’s Election Day or Election Day plus one that is super volatile,” Schumacher said. “But this year, markets are saying ‘Hey, wait a minute. We see a lot of vol after the election.”
Exchanges and Clearing
Deutsche Börse acquires a majority in quantitative brokers, thereby strengthening its strategic focus on the buy side
Deutsche Börse secures a majority stake in Quantitative Brokers LLC, an independent provider of sophisticated trading algorithms and data-based analysis for global futures, options and interest markets; The leading fintech is well integrated into the buy-side value chain. The growing global customer base will give Deutsche Börse’s buy-side initiatives further impetus; the two founders of Quantitative Brokers, Christian Hauff and Robert Almgren, will continue to manage the company and hold significant shares
Deutsche Börse acquires a majority stake in Quantitative Brokers (QB), an independent provider of sophisticated execution algorithms and data-based analysis applications for the global futures, options and interest rate markets. The fintech, with offices in New York, London, Sydney and Chennai, is a thought leader in terms of market structure and innovation leader in the fast-growing market for intelligent electronic order execution.
MIAX Exchange Group – Options Markets – Corporate Action Alert: CenturyLink, Inc. (CTL) symbol change to (LUMN)
CenturyLink, Inc. (CTL) will change its symbol to (LUMN) effective on Friday, September 18, 2020. All GTC orders resting on the MIAX order books in CTL will be canceled at the close of business on Thursday, September 17, 2020. NOTE: LUMN options will trade on Cloud 11 on the MIAX Options Exchange and on Cloud 5 on the MIAX PEARL Options Exchange and the MIAX Emerald Options Exchange. Additional details about CenturyLink, Inc. (CTL) symbol change are provided in the attached OCC Memo.
Regulation & Enforcement
A New Pact Will Help Derivatives Markets
Valdis Dombrovskis and Heath Tarbert – WSJ
The world’s derivatives markets saw more than $640 trillion in trading activity in the first six months of 2019 alone. At the heart of these global markets are clearinghouses known as central counterparties, where futures, swaps and options transactions are cleared and settled. The efficient and proper functioning of central counterparties is critical to the health of the global financial system and the economic well-being of the more than 770 million people in the EU and U.S.
CFTC drops proposal to extend trade reporting timeline for some swaps
Karen Brettell – Reuters
The U.S. derivatives regulator on Thursday said it was backing away from a controversial proposal to delay the trade reporting of some swaps, after a number of market participants said that it would make it more costly and difficult to trade the contracts.
New Bitcoin Options App Raises $4.7M in Round Led by Pantera Capital
Sebastian Sinclair – Coindesk
A mobile bitcoin options trading platform set to launch this year has secured funding from some of the industry’s top-tier investors. PowerTrade raised $4.7 million via token sales in a round led by Pantera Capital and joined by Framework Ventures, CMS Holdings and QCP Capital among others. Prominent founders Kain Warwick of Synthetix, Loi Luu of Kyber Network and Bobby Ong of CoinGecko also participated. PowerTrade said in a press release it will offer low minimum deposits allowing traders access to crypto options for as little as $1.
Cryptocurrency derivatives platform Delta Exchange now offers put and call options contracts settled in the stablecoin tether (USDT).
Sebastian Sinclair – Coindesk
Cryptocurrency derivatives platform Delta Exchange now offers put and call options contracts settled in the stablecoin tether (USDT). Calling the news an industry first, the Singapore-based firm also said Thursday it’s one of just four crypto exchanges to offer a full order book for puts and calls. The options contracts will be offered for trading on bitcoin (BTC) ether (ETH), Chainlink (LINK) and Binance coin (BNB) with daily, weekly and monthly maturities. Options contracts give holders the right to buy or sell the underlying asset at a set price on a set date in the future.
Q&A with Qontigo & Eurex: Impact of ICB Classification Changes
On Sep. 21 Qontigo will implement announced changes to the sectorial classification structure of STOXX indices following the first major overhaul of the Industry Classification Benchmark (ICB) in years. In a post last week, we covered some of the key changes that the ICB overhaul will bring about for STOXX indices. To find out more, Pulse Online caught up with Giulio Castelli, Head of Benchmarks, Strategies and Specialty Themes at Qontigo. We also talked to Zubin Ramdarshan, Head of Equity and Index Product Design at Eurex, to understand what the new indices mean for very popular derivatives.
Market volatility brings vintage hedge fund strategy back to the fore
Laurence Fletcher – Financial Times
One of the hedge fund industry’s oldest — and often least loved — strategies is making a comeback, helped by this year’s market turmoil.
Convertible arbitrage, the strategy on which billionaire traders such as Ken Griffin and Michael Hintze cut their teeth, is delivering healthy returns for managers once more. Hedge funds attribute the revival to a surge in market volatility since the coronavirus crisis began, and a flood of new bond issuance from embattled companies such as Carnival and Southwest Airlines.
Just launched: an ETF made for black-swan moments like these
Andrea Riquier – MarketWatch
How is the market going to perform over the next several months?
While every moment in history may always feel like the most precarious so far, this year’s pandemic and unstabilized geopolitics may mean 2020 is truly a special case. Any one of a number of triggers over the next few months – a hard Brexit, a contested U.S. election, a COVID-19 vaccine failure – could prompt a market tumble, like in early March. On the other hand, policy responses, or welcome surprises, may trigger a meltup, like the one that started in late March.
US Dollar: Buy or Sell?
Frank Kaberna – tastytrade
The path for USD has been rocky since its highs of mid-March, but the degree of rockiness depends on the path you’re taking. Continued complications around Brexit have now sent the pound (GBP) lower against the dollar on the year, while the euro’s (EUR) take on this news has been mostly bullish. Then there’s the yen (JPY) that is trying to find out what exactly Japan’s new prime minister, Yoshihide Suga, might mean for the BOJ.
The impending EU CCP recovery and resolution regime and its impact on EU and non-EU firms
24 September 2020 • 10:00 AM – 11:00 AM ET • Webinar
On 24 September, representatives from Allen & Overy’s Global Financial Services Regulatory and Bankruptcy practice in London and New York will provide an overview of the EU legislative framework for the recovery and resolution of CCPs operating in the EU, which has now been finalized. The aim of the framework is to reduce the risk of a CCP failing and to establish procedures for the resolution of a CCP that has failed in order to limit impact on the financial system and on public funds. The regime and the changes it will require to EU CCP practices will be relevant to all direct and indirect participants in EU CCPs. The New York team will moderate and draw out the impact of the EU CCP Recovery and Resolution Regime on US clearing members and contrast the EU framework with the US position for CCP bankruptcy and resolution under the CFTC’s proposed Part 190 bankruptcy regulations and other recovery and resolution initiatives for CCPs.”