Observations & Insight

Sandra Ro, CME Group – Financial Services Disruption: the Rise of Bitcoin and Blockchain

“There is this big debate as to whether bitcoin is a currency or a commodity. I would argue that it is its own category.”

Sandra Ro is a veteran in the world of bitcoin and blockchain, which simply means that she has been following the cryptocurrency and its underlying technology for over two years. In this MarketsWiki Education talk, Ro takes us through the nascent world of digital currencies, from the volatility of bitcoin, to the rise of blockchain technology and massive investments being made by venture capitalists, banks and other strategic investors. According to Ro, the next few decades are going to be exciting.

Watch the video »

Lead Stories

Swelling Global Grain Glut Spurs Largest Bearish Bet Since June
Megan Durisin – Bloomberg
Overflowing grain bins prompted money managers to expand their wagers on lower crop prices by almost ten times in the space of a week.
Global inventories of corn, wheat and soybeans will each rise to all-time highs before next year’s North American harvests, the U.S. government forecasts. While grain prices have already dropped to five-year lows, hedge funds are predicting more losses as stockpiles expand. The funds are holding the biggest bearish bet on the crops since June.

Fed-Ready Currency Traders Calm About December After Stormy 2015
Rachel Evans and Lananh Nguyen – Bloomberg
Currency traders are giving the Federal Reserve a green light for its first interest-rate increase in almost a decade.
After a year of surprises that saw exchange-rate volatility climb to its highest since 2013, measures of future price swings have fallen back below the 10-year average, a sign the market is sanguine about tighter central bank policy. The euro fluctuated in the narrowest range last week versus the dollar in more than three months.

Eton Park’s Mindich Raises Options Bet on Japan to $876 Million
Miles Weiss – Bloomberg
Eton Park Capital Management, the hedge fund firm managed by Eric Mindich, built an $876 million stake in Japanese stocks by purchasing additional call options on an exchange-traded fund.

Soros Reports Smaller Wager Against S&P 500
Maria Armental – WSJ
Billionaire investor George Soros, who gained notoriety for betting against the British pound in 1992, reported a smaller wager against the S&P 500 as of Sept. 30.
His regulatory filing comes as the S&P 500 dropped about 7% in the third quarter, its biggest quarterly loss in four years. Mr. Soros had long speculated that markets were due for a tumble as stock indexes surged in recent years, and he had built up a large “put” position on the SPDR S&P 500 ETF, the most widely traded fund that tracks the broad S&P 500 stock index.

Oil slides 2 percent, market refocused on global supply glut
Crude oil futures fell about 2 percent on Tuesday, resuming their slide after a one-day pause, as oversupply concerns returned to suppress a market briefly lifted by geopolitical worries linked to the Paris attacks.

Why terrorism has a limited impact on markets
For some people, even to discuss the impact on an economy, let alone financial markets, of a tragedy such as the Paris attacks is poor taste. But one of the aims of terrorists is to cause economic and financial damage; hence the attacks on Wall Street on 9/11 or on tourists in Tunisia earlier this year. So the issue is worth considering.

Spot Trading’s Saez Says He Quit Chief Investment Officer Job
Brian Louis – Bloomberg
Spot Trading LLC’s chief investment officer, Carlos Saez, said he resigned from the Chicago-based company that uses computer-driven strategies to buy and sell options.
Saez was also a partner at Spot. Before joining the company in 2005 as director of trading, he was a floor specialist for TD Options LLC at the Chicago Board Options Exchange and worked at Stafford Trading, according to his LinkedIn profile.

These Wall Street Jobs Are Poised for Biggest Swings in Pay
Hugh Son and Michael J Moore – Bloomberg
This was a great year on Wall Street to help buy and sell drug companies. Distressed debt and mortgage-linked securities? Not so much.
Financial firms are preparing to lavish this year’s biggest raises on health-care bankers, who will probably see a 20 percent bump on average, according to an Options Group Inc. report projecting this year’s biggest pay swings. Other winners include telecommunications, media and technology bankers and traders of rates options and equity derivatives — all getting 15 percent more than last year. Traders of distressed debt and fixed-rate collateralized mortgage obligations may see their compensation tumble 25 percent.

***JB: Rates-options traders look to get a raise.


ICE goes live with its first Asian exchange
Luke Jeffs – Futures & Options World
The Intercontinental Exchange has compounded a hectic month by launching on Tuesday an Asian exchange and clearing house in Singapore, marking the first time a non-Asian group has launched an exchange in the region.
ICE launched as planned on Tuesday ICE Futures Singapore and ICE Clear Singapore with five contracts: mini Brent; mini gasoil; kilo gold; mini onshore; and mini offshore Renminbi.
The exchange and clearing house are being run by Lucas Schmeddes, the president and chief operating officer of ICE Futures and ICE Clear Singapore.

CME loses London-based Trayport to rival Intercontinental Exchange
Lynne Marek – Crain’s Chicago Business
Intercontinental Exchange beat out rival futures exchange operator CME Group to purchase European trading software provider Trayport, tripping up one of CME’s efforts at European expansion.
CME sought earlier this year to acquire New York broker GFI Group in the hopes of getting its hands on the London-based Trayport subsidiary and another GFI unit called Fenics, which provides software for foreign exchange trading and analytics.

China Europe exchange to launch Wednesday
Alice Attwood – Futures & Options World
The China Europe International Exchange (CEINEX) is set to Wednesday go live after six months of development, offering cash market products initially ahead of adding futures and options contracts next year.
CEINEX is a joint venture between Deutsche Boerse, the Shanghai Stock Exchange (SSE) and the China Financial Futures Exchange (CFFEX), and has the remit of supporting the internationalisation of the Chinese currency.

Nasdaq Said to Be in Talks to Acquire Chi-X Canada Market
Traders News
Nasdaq Inc. is in talks to buy Chi-X Canada, an acquisition that would put it in direct competition with TMX Group Ltd.’s Toronto Stock Exchange, according to people familiar with the matter.

Hotspot Announces Successful Migration of U.S. Matching Engine to Equinix NY5 Data Center
Hotspot, a leading institutional foreign exchange (FX) market owned and operated by BATS Global Markets (BATS), today announced the successful migration of its U.S. matching engine to the Equinix NY5 data center on Monday, November 9th.

Regulation & Enforcement

Exclusive: After market crash, China mulls single ‘super-regulator’ – sources
Engen Tham and Benjamin Kang Lim – Reuters
China is considering bringing together its banking, insurance and securities regulators into a single super-commission, sources told Reuters, following the summer’s stock market crash that was blamed in part on poor inter-agency coordination.

****SD: It’s a bird, it’s a plane…

Court Says Congress Must Comply with Federal Insider-Trading Investigation
Brody Mullins – WSJ
Federal law-enforcement officials can resume a high-profile insider-trading investigation after a New York judge said Congress must cooperate with investigators looking into a possible leak of government health-care policy.
In a decision announced Monday, U.S. District Judge Paul Gardephe sided with the Securities and Exchange Commission in much of the case and said a House committee and a former top aide must comply with many parts of a subpoena.

Japanese authorities add seven more FX, binary options brokers to Warning List
Maria Nikolova – LeapRate
Japan’s Financial Services Agency (FSA) has earlier today updated its list of businesses that target Japanese investors but lack the necessary authorization to do so.


Selling SPY Put Options Like Limit Orders
Scott Nations – ETF.com
Stock prices fell the last three days of last week, and closed on Friday with a 3.5 percent loss on the week. For ETF investors who feared they had missed the rally, and lamented not buying in September or October, last week’s decline offered an opportunity to get a bit of a bargain. And those who used a common option strategy could get an even bigger bargain.

Finding the Best Time to Fade an Overbought VIX
Adam Warner – Schaeffer’s Research
Okay, how about another way of parsing overbought CBOE Volatility Index (VIX)? I’ve generally advocated looking at the VIX “stretch” as a continuum. I use 20% above the 10-day simple moving average (SMA), but that’s simply a round number that triggers a nice quantity of signals (about four per year). But VIX closing 19% above its 10-day “ain’t nothing,” even though it’s a non-event in this system. Likewise, VIX 40% above the 10-day isn’t the same thing as 20% above, even though it’s treated the same.

Euro-Yen: Reading The Option-Market Tea Leaves
Marc Chandler – Investing.com
The latest leg down for the euro began in mid-October when the single currency met a wall of sellers in front of $1.15. Draghi’s dovishness at the press conference following the October 22 ECB meeting sent the euro toward $1.11. The contrasting hawkishness of the Federal Reserve, where the FOMC statement on October 28 specifically cited the next meeting, pushed the euro to $1.09. The largest rise in US nonfarm payrolls this year saw the euro sell off through the $1.08 area, which had offered support in the summer. Many participants have their sights set on the multi-year low set in March near $1.0460, and parity.

What the Options are saying about the Euro
Very short-dated options that many observers focus on tracks spot too closely to be particularly useful for our purposes. For this exercise, we look at three-month volatility and risk-reversals.

Not So HOT Bull Call Spread in Front of Marriott – Starwood Deal
CBOE Options Hub
Domestic and Global M&A activity continues to be incredibly robust. In fact, 2015 is on track to be the best year ever, surpassing 2007, in both the US and worldwide for acquisitions. Much of the deal emphasis has been on technology and healthcare. These groups tend to have a number of conferences and the attendees have to stay somewhere. That leads us to the latest M&A transaction.


Skew Charts to Prepare for Conference in Hong Kong
Matt Moran – CBOE Options Hub
This month I am planning to travel to the First Annual CBOE Risk Management Conference (RMC) Asia, which will be held on November 30 – December 1 at the JW Marriott Hotel, Pacific Place, 88 Queensway, Hong Kong. In my preparations for the trip, I am analyzing the skew charts for a number of option classes, including options on the S&P 500, the CBOE Volatility Index (VIX), and the EEM and FXI ETFs.


1st Annual CBOE Risk Management Conference Asia 2015
Hong Kong Site of Forum for Options, Equity Derivatives, Volatility Traders, November 30 – December 1
The Chicago Board Options Exchange (CBOE) and CBOE Futures Exchange (CFE) will for the first time hold a CBOE Risk Management Conference (RMC) in Asia, on Monday, November 30 and Tuesday, December 1, 2015, at the JW Marriott Hotel in Hong Kong.

Introducing Weekly VIX Options on Metro NOW Platform
Options City Webinar, Thursday, November 19, 2015
On October 8, VIX Weekly options started trading at Chicago Board Options Exchange. New Weekly expirations for VIX futures and options will be listed on Thursdays and expire on Wednesdays.

OptionsCity’s Metro NOW, a high performance, sever-based options trading platform, can provide you a full access to CBOE’s products. Metro NOW is built for speed, and it ensures clients fast and reliable access to exchanges and products.

In this webinar, we are glad to invite Russell Rhoads from CBOE to join us and give us a brief introduction about the Weekly VIX Options; followed by a Metro NOW demo demonstration focused on trading this product given by Patrick Gardner from OptionsCity.

Register Here

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