Observations & Insight
Scott Knudsen – The Path to Electronic Trading Led to a Best Execution Platform For Bitcoin
John Lothian News interviewed Scott Knudsen, the founder of Cove Markets and a former longtime executive with IMC, for The Path to Electronic Trading video series, but we broke off this part of the interview into a stand-alone video.
Investors brace for ‘major shift’ as momentum and value collide
Robin Wigglesworth, Madison Darbyshire and Laurence Fletcher – Financial Times
The strength of the recent rally in cheap stocks could trigger a rare shift in equity market dynamics that some investors expect will fuel the gains of financial and energy companies.
For much of the past decade, so-called momentum stocks have been on fire, layering gains upon gains. Meanwhile, unloved “value” stocks have limped behind, frustrating a generation of fund managers who made their reputation eking out equity market bargains.
Chinese Hedge Fund Jumps 258% After Dumping Ray Dalio’s Strategy
Shanghai Banxia’s Li says Dalio approach is unsuited to China; Shift to embrace leverage helped tiny macro fund top rankings
Shanghai hedge fund manager Li Bei says she learned quickly that the low-volatility approach to investing behind the rise of Bridgewater Associates was doomed in China for a startup like hers. Steady returns did little to draw investors used to short-term rewards, so she put in her own money, cranked up leverage and produced an industry-leading 258% gain last year.
Fat Finger Briefly Trims $4 Billion Off Barclays’ Market Cap
Joe Easton and Jan-Patrick Barnert – Bloomberg
Barclays Plc shares briefly dropped almost 10% in the opening minutes of Wednesday’s session, the most intraday in more than a year, in what traders said was likely due to an error known as a “fat finger.”
The stock entered a volatility auction at about 8:06 a.m. in London after two trades totaling about 48,000 shares at a price of 168.40 pence, according to Bloomberg data. The shares quickly recovered after the five-minute pause and were down 0.3% to 186.32 pence at midday.
Goldman Sachs (GS) Equity Traders Fuel Record Quarter After Reddit Mania
Sridhar Natarajan – Bloomberg
Goldman Sachs Group Inc. cashed in on another roaring period for its traders and investment bankers, with revenue and earnings rising to a record in a quarter marked by the Reddit-fueled stock-market mania.
The bank’s traders delivered their strongest performance in more than a decade, with a 47% surge in revenue, led by a jump in equities. Goldman’s dealmakers joined the party, with a 73% surge in investment-banking fees in the first quarter. That bonanza was anchored by revenue from equity underwriting, which quadrupled amid a red-hot market for special purpose acquisition companies and tech-company stock offerings.
Archegos Ripples Through Banks’ Lucrative Hedge Fund Units
Cathy Chan and Steven Arons – Bloomberg
The collapse of Archegos Capital Management LP, an investment firm that few even on Wall Street had heard of until it imploded last month, is changing a lucrative, decades-old part of global banking.
Nomura Holdings Inc. and Credit Suisse Group AG, the two lenders hit hardest, have started to curb financing in the business with hedge funds and family offices. European regulators are looking at risks banks are taking when lending to such clients, while in the U.S., authorities started a preliminary probe into the debacle.
Exchanges and Clearing
Options Regulatory Alert #2021 – 22 UPDATED – PHLX, NOM, BX, ISE, GEMX and MRX – Quarterly Quote Spread Parameter Relief through June 18, 2021
Effective Wednesday, April 14, 2021, the updated market maker quarterly quote width requirements on Nasdaq PHLX (PHLX), The Nasdaq Options Market (NOM), Nasdaq BX (BX Options), Nasdaq ISE (ISE), Nasdaq GEMX (GEMX) and Nasdaq MRX (MRX) will be effective through June 18, 2021. The exchanges may, in their discretion, amend these requirements by providing notice to members.
Regulation & Enforcement
Archegos Collapse: Switzerland’s Finma Says Lessons Must Be Drawn on Risk
Nicholas Comfort and Birgit Jennen – Bloomberg
Switzerland’s top financial regulator said the collapse of Archegos Capital Management LP will have consequences for how banks deal with risk as one of the country’s biggest lenders counts its losses from exposure to the investment firm.
“This will be meticulously examined and there will be lessons, maybe for regulators, maybe for the banks who were involved, maybe for supervisors,” Mark Branson, the head of Swiss regulator Finma, said Wednesday in Berlin. “It’s too early to say what, but it shows that there are enormous dangers in this market environment and a lot of leverage in some investor portfolios.”
Former CFTC chairman Giancarlo joins Baton Systems as senior advisor; Chris Giancarlo joins Baton Systems as senior advisor after serving for five years as chairman and commissioner at the CFTC.
Annabel Smith – The Trade
Post-trade and blockchain technology provider Baton Systems has appointed the former chairman of the US derivatives watchdog as a senior advisor. Christopher Giancarlo joins Baton Systems in the role where he will support the firm’s post-trade payments and settlements growth strategy.
J.P. Morgan Chase, Goldman Sachs stock options imply bigger than usual post-earnings moves
Tomi Kilgore – MarketWatch
Options traders appear to be expecting a hot start to first-quarter earnings season, as “straddles” on shares of J.P. Morgan Chase & Co. and Goldman Sachs Group Inc. are priced for much-bigger-than-usual moves after results are released.
Meanwhile, stock option prices are implying a post-earnings move in Wells Fargo & Co.’s stock that is mostly in line with recent history.
Bitcoin’s Contango Could Deliver Big Risk-Free Returns by December
Vicky Ge Huang – Business Insider
For what has been known as a digital store of value, Bitcoin itself is a headache to store.
Stories of lost, forgotten, or stolen passwords locking holders out of their Bitcoin fortunes have kept some institutions on the sidelines and scared off other more traditional investors.
Rising Star Teaches Me How to Win with Jade Lizards | Rolling Trades Series
Vonetta Logan – tastytrade
So…how was everyone’s 2020? As spring arrives in the midwest and the vaccine gets rolled out, I’m super excited for things to get back to some semblance of normalcy. 2020 was definitely a year of fear, uncertainty, and despair and that was just on the dating apps. I will be brutally honest and say that I did not trade a whole lot during 2020. As a newbie trader, I tried to make mechanical trades in March and April of 2020, but the violent swings during the afternoon press conferences or on random bits of news was enough for me to say, “welp, that’s enough trading for today” and then retire into the fort I had built out of my surplus of toilet paper.
Fundamentals of Futures & Options (also applicable to Series 3 Exam)
For more than 30 years, IFM has consistently provided learners with a solid foundation and understanding of futures and options markets and trading including terminology, risk management, pricing, and basic trade strategies. This instructor-led virtual course includes lectures from an engaging instructor with real-world expertise and supported by class discussion, practice exercises and educational materials. The course fee includes two must-read industry books – Futures and Options and the Guide to U.S. Futures Regulation.
Date May 10, 2021 12:00 p.m. – May 14, 2021 2:00 p.m.
Location: Virtual Live. 2-hour sessions over 5 days.
Instructor: Marti Tirinnanzi
Class size registration is limited to approximately 20 participants to promote student participation and interaction.
Q1 2021 ETD Volume
May 5, 2021; 10:00 a.m. to 11 a.m. ET
The webinar will highlight the main trends in trading activity in Q1 2021 in the global exchange-traded derivatives markets, with category and regional breakdowns as well as exchange and contract rankings. The webinar also will feature two guest speakers from UBS discussing the rise of retail participation in the U.S. ETD markets.
A New Virtual Experience
The Options Industry Conference is Going Virtual in 2021. Join OCC and the options exchanges for the 39th annual Options Industry Conference, April 28-29, 2021. While the conference will be held virtually for the first time in its history, the focus will continue to be the key topics facing the options industry today, from the regulatory shifts in the U.S. and Europe to the technological developments that are driving monumental change in markets around the globe.
The Covered Call Options Strategy
Date: Wednesday, May 12, 2021
Time: 3:30 p.m. CT
Duration: 1 hour
Mark Benzaquen – Principal, Investor Education – OCC
For options investors, the covered call is one of the core strategies for income generation, but there are many details to consider before opening a position. On May 12, join The Options Industry Council’s Mark Benzaquen, a former pit broker who now focuses on options education, for a detailed overview of the covered call.
(Podcast) OBC 131: Options Volume, Credit vs Debit Spreads, Cash-Settled Options and More
Nancy Crotty – Options Insider Radio Network
In this episode, Mark and Dan discuss how options volume shaped up in March, credit spreads vs. debit spreads, cash-settled options, if you can lose more than your investment in options, and much more…