If there’s an ‘actionable bubble’ in the stock market, this might be it, says BTIG’s Emanuel; Bitcoin Volatility Surges Amid Flirtation With $12,000 Threshold

Aug 11, 2020

Lead Stories

If there’s an ‘actionable bubble’ in the stock market, this might be it, says BTIG’s Emanuel
William Watts – MarketWatch
Spotting a stock-market bubble isn’t as easy as it sounds. And even when traders do correctly identify one, economist John Maynard Keynes’s famous warning that the market can remain irrational “longer than you can remain solvent” should still ring in their ears, says Julian Emanuel, chief equity and derivatives strategist at BTIG.

Bitcoin Volatility Surges Amid Flirtation With $12,000 Threshold
Amena Saad – Bloomberg
One of the most alluring aspects of Bitcoin to traders and speculators is back: Volatility.
Price swings by the largest cryptocurrency have reached the highest level in about a year in the past few weeks as the digital asset trades around $12,000. Bitcoin crashed almost $500 in a matter of minutes this morning after reaching that level, only to begin testing that high again.

Russia’s Coronavirus Vaccine Isn’t All That. The Stock Market Doesn’t Care.
Al Root – Barron’s
Russia has the world’s first approved vaccine for Covid-19.
The news is grabbing attention, but there are a few caveats. The vaccine, apparently, hasn’t gone through the equivalent of Phase 3 trials.
Typically drugs and vaccine approvals go through three stages. Phase 1 trials determine safety. Phase 2 is about dosing—how much to take. And Phase 3 determines effectiveness. The speed with which the vaccine was developed leaves some questions about efficacy.

Kodak’s Turmoil As Seen Through Options
ORATS blog
Due to a SEC investigation and increased scrutiny, the $765 million dollar loan to Eastman Kodak (KODK) from the federal government to make drugs has been put on hold. News of the loan was a panacea for KODK when it broke on 7/28/20. The options market tells the tale. On 7/27/20 the average number of options that trade in the entire options chain for KODK was 115 contracts for the trailing 20 days.

Inside Volatility Trading: August 11, 2020
Kevin Davitt – Cboe blog
Cboe is excited to announce the launch of the Mini Cboe Volatility Index (Mini VIX™) futures as of August 10. The Bloomberg ticker is VXLA. The smaller sized futures contract has a $100 multiplier as opposed to the $1000/point inherent in the standard contract. These contracts may allow for more precise allocation as well as flexibility for CTAs, sophisticated market participants, and those that understand volatility markets.

Exchanges and Clearing

OCC boosts funding for “skin in the game”
Will Acworth – FIA.org
OCC, the world’s largest clearinghouse for equity derivatives, has announced that it plans to seek regulatory approval in the US to increase the amount of capital that it contributes to the financial resources available to cover losses from a member default. In a letter sent to members on 3 Aug., OCC said it decided to commit $62 million as a minimum amount for its “skin in the game” contribution to default protections. The Chicago-based clearinghouse currently allocates some of its capital to this purpose, but the amount is variable. It is now seeking approval from the US Securities and Exchange Commission to ensure that this amount never falls below $62 million.

Effective August 10, 2020 through August 14, 2020, MIAX Options and MIAX Emerald 2X
MIAX Exchange Group
Opening and Intraday Valid and Priority Quote Spread Relief in All Symbols
Issue Symbol: All Symbols
Multiplier: 2X
Reason: In maintenance of a fair and orderly market.
Time: Opening and Intraday
Subject Summary: Please be advised, effective August 10, 2020 through August 14, 2020, the MIAX Regulation Department has granted 2 times opening and intraday quote parameter relief for all symbols on MIAX Options and MIAX Emerald.

MIAX Exchange Group – Options Markets – Intra-day Series Adds in MCRB
MIAX Exchange Group
The attached series in Seres Therapeutics, Inc. (MCRB) were added to the MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange effective for today, Monday, August 10, 2020.

Regulation & Enforcement

Hertz sold $29 million in shares before the SEC stopped it from selling even more, despite filing for bankruptcy in May
Saloni Sardana – Markets Insider
Hertz sold $29 million of its shares in the second quarter, despite filing for bankruptcy and despite the overwhelming odds that its shareholders would be wiped out, until the Securities Exchange Commission prevented it from selling even more.
The company disclosed in its second quarter earnings release Monday the results of its efforts to sell as much as $500 million in its shares.

Swaption compensation consensus proves elusive
Rebekah Tunstead – Risk.net (Subscription required)
The euro swaptions market hit a milestone in late July when long-planned changes to the discount rate at clearing houses led to knock-on adjustments in the valuations of related derivatives. But despite regulator-backed recommendations that any losses should be compensated on a voluntary basis, many users are unwilling to participate in a potential voluntary compensation exchange.

NYSE American
Two Sigma Securities, LLC, violated Exchange Act Rule 14e-4, by failing to correctly account for its “in the money” call options position when calculating its net long position as required under the rule, and violated NYSE American Rule 320 by failing to establish, maintain and enforce written supervisory procedures reasonably designed to ensure compliance with Exchange Act Rule 14e-4(b). Consent to a censure, a total fine of $20,000 (of which $6,666 shall be paid to NYSE American LLC), and total disgorgement of $713.06 (of which $237.69 shall be paid to NYSE American LLC).

*****MR: NYSE Arca issued a similar release here.


PayPal Is Unstoppable. How to Play It With Stock Options.
Steven M. Sears – Barron’s
In the time it takes you to read this sentence, PayPal Holdings will likely have transferred money between thousands of people and companies.
The company, which is like the internet’s online bank, is thriving during the Covid-19 pandemic, which has tens of millions of people all over the world desperately trying to limit contact with others without ceding victory to the coronavirus.


Robinhood hosted more than 4.3 million daily average trades in June – handily beating its biggest brokerage rivals
Ben Winck – Markets Insider
Robinhood easily overtook its rivals in trading activity during June as a surge in retail investing drove millions to its platform.
The company released daily average revenue trades, or DARTs, data for the first time. The first set of figures shows just how much of a boost Robinhood has gotten from pandemic-fueled volatility and heightened public interest in investing – especially relative to peers.

Hong Kong Political Volatility Meets Stock-Market Volatility
Even with a subject as serious as freedom of the press, a Hong Kong story wouldn’t be complete without an opportunity to send a small-cap stock’s price into the stratosphere.
Next Digital Ltd., the company founded by pro-democracy businessman and Apple Daily newspaper proprietor Jimmy Lai, has soared since his arrest Monday, driven seemingly by political well-wishers rather than any underlying financial logic.

(Podcast) Option Block 925: Crazy Collars and Rolling Diagonals
The Option Block – Options Insider

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