Lead Stories

Hedge funds push yen options bets to next BoJ meeting
Joe Parsons and Ben St. Clair – Risk.net (Subscription)
Hedge funds speculating on the yen’s reaction to possible changes in the Bank of Japan’s interest rate regime have rolled their bets to the central bank’s next meeting in March, after it maintained its controversial ultra-loose monetary policy on January 18.
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Meme Frenzy Returns and GameStop Stock and Dogecoin Are Soaring Again
Jack Denton – Barron’s
The market is off to a roaring start in 2023, and it’s not just Wall Street that’s feeling the groove. The meme-fuelled, retail-focused trading that in many ways epitomized the pleasure and pain whipsaw from 2021 to 2022 is back. Just look at the fan favorites.
So-called meme stocks and memecoins—their equivalent in the world of cryptocurrencies—are vastly outperforming more mainstream risk-sensitive assets.
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A Genesis Bankruptcy Is the Last Thing Crypto Needs. Cue Bitcoin Volatility.
Jack Denton – Barron’s
If Genesis 6221 +0.19% Trading becomes the latest in a long line of cryptocurrency business failures over the past year, its collapse would have a tangible impact on crypto markets and likely increase volatility in the price of Bitcoin BTCUSD +1.02% .
The trading and lending arm of crypto conglomerate Digital Currency Group, Genesis is preparing to file for bankruptcy within days, The Wall Street Journal reported late Wednesday, citing multiple anonymous sources. The group is in the final stage of paperwork prior to filing for Chapter 11 bankruptcy protection, the report said.
/jlne.ws/3wd3CEm

Cryptocurrency Derivatives See Increased Institutional Interest
Paigambar Mohan Raj – Watcher.guru
According to Arcane Research, futures premiums for cryptocurrency derivatives have grown over the last week. The 3-month basis for Binance is reaching highs not seen since April 2022. However, open interest in Binance futures, now at 6,600 BTC, is relatively low. The CME basis has also made a significant comeback over the past two weeks and is now at 0.7%, the highest since September 2022. The development indicates that institutional trader sentiment is growing. Additionally, Arcane adds that for the first time since early November, CME’s near-term futures structure is no longer in backwardation. The implication is that institutional traders are more comfortable investing in longer-dated maturities for cryptocurrency derivatives.
/jlne.ws/3QQU8YS

Oil Extends Decline on US Recession Concern, Inventory Build
Julia Fanzeres and Immanual John Milton – Bloomberg
Oil regained its footing as investors wagered China’s demand revival would sustain the market, shrugging off an expected rise in US domestic stockpiles.
West Texas Intermediate rose as much as 2.1% to above $81 a barrel in a volatile session on Thursday. JPMorgan raised its estimate for China’s oil demand growth, with consumption on track to reach a record high of 16 million barrels a day. However, lingering economic growth fears in the US continued to spook Wall Street, prompting some traders to shy away from risky assets.
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Exchanges

CME Group Announces Record Copper Options Open Interest As Participation Grows Across Base Metals
CME Group
CME Group, the world’s leading derivatives marketplace, today announced that open interest in Copper Options (HX) has reached multiple, back-to-back records, reaching 137,574 contracts on January 18, 2023. Average daily volume (ADV) across the company’s Copper Futures and Options complex is at 131,466 contracts month-to-date, up 42% from full-year 2022 ADV. Copper Options ADV is at 12,513 contracts month-to-date, up 410% over last year.
/jlne.ws/3iQzYli

CME Group to expand Micro E-mini Nasdaq-100 and S&P 500 weekly options
Dave Kovaleski – Financial Regulation News
CME Group plans to expand its suite of weekly options expiries for its Micro E-mini Nasdaq-100 and S&P 500 futures. The world’s leading derivatives marketplace will launch Monday, Tuesday, Wednesday, and Thursday Weekly options on February 13, pending regulatory review. The new weekly options contracts will complement the existing Friday Weeklies, End-of-Month, and Quarterly options on Micro E-mini Nasdaq-100 and S&P 500 futures.
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Dividend Derivatives: Recap of 2022
Eurex
2022 has been a record year in dividend derivatives, with more than 20 million contracts traded (+20% vs. 2021), surpassing the exceptional year for dividend derivatives in 2020. During the volatile year of 2022, the focus and growth were mainly in index dividend derivatives (EURO STOXX 50 Index Dividend Futures, EURO STOXX 50 Index Dividend Options and EURO STOXX Banks Index Dividend Futures), after a more subdued 2021. The index dividend futures were up 64% vs. 2021 and the dividend options were up 38% vs. 2021.
/jlne.ws/3Xf0ALL

CCP12 response to DMIST’s Consultation Paper: Standard Regarding Timeliness of Trade Give-Up and Allocation
Global Association of Central Counterparties
The Global Association of Central Counterparties (“CCP12”) appreciates the opportunity to comment on the Derivatives Market Institute for Standards’ (“DMIST”) Consultation Paper: Standard Regarding Timeliness of Trade Give-Up and Allocation (“Consultation Paper”).1 CCP12 is the international association for central counterparties (“CCPs”), representing 40 members who operate over 60 CCPs across the Americas, EMEA, and the Asia-Pacific region. CCP12 recognizes the importance to improve and strengthen the post-trade processes across all participants for exchange traded derivatives. We therefore appreciate DMIST’s initiative on this important topic and support the proposed 30/30/30 standard. We furthermore concur that the standard is both ambitious and achievable.
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Large Amounts Of ‘Put Buying’ In Both SPY And QQQ Point To Higher Prices
Michael James McDonald – Seeking Alpha
The CBOE equity “puts to calls” ratio went to the highest level in the last 20 years, even above the levels reached during the 2007-2008 financial crisis. Confirming this, five times more money is currently going into QQQ puts than QQQ calls. Similarly, over two times more money is going into SPY puts than calls, equal to the ratio reached at the March 2020 bear market lows.
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Strategy

The Market Still Looks Frothy. Here’s One Way to Hedge Your Bets.
Steven M. Sears – Barron’s
The only thing investors have to fear is the absence of fear itself.
The stock market has surprisingly advanced in 2023, and many stocks have behaved even better, with investors discounting the prospects of a recession as economic data suggest inflation has peaked.
The onset of earnings season, which some investors thought would trigger a bearish revaluation of stocks, is thus far being priced as a benign event.
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Are Investors Too Complacent Heading Into Earnings Season?
Bryan Hayes for Zacks – Nasdaq
The last two days notwithstanding, stocks have started 2023 on a bullish note, with many technology companies reemerging after a tumultuous year last year. A potential shift in sentiment may be underway, as the Nasdaq has been outperforming its peers this year, in stark contrast to the Dow’s outperformance in 2022. The gains have been welcomed by bullish investors with open arms as the major indices attempt to claw back some of their lost ground. Still, this week’s market action is cause for concern. The VIX Index, commonly referred to as the “fear gauge”, has spiked more than 15% since hitting a yearly low just last week.
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Education

OIC 2023 Educational Series: Options Basics, Options Pricing and the Greeks
OIC
As a new year begins, OIC is proud to announce it will be providing even more educational sessions for investors over the coming months. Beginning with the first quarter of 2023, OIC has two webinars planned for each month of the year – that means six brand new events per quarter and double last year’s offering. While all OIC webinars during the year will be stand-alone learning opportunities, every month will be structured with a theme designed to make attending both monthly webinars into an even richer experience for viewers.
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Events

Asset Management Derivatives Forum 2023
FIA
We’re excited to once again bring together the joint membership of FIA and SIFMA’s Asset Management Group with leading regulators to examine the latest developments impacting the use of derivatives by asset managers.
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