Observations & Insight
Welcome to the lastest John Lothian News Special Report: Unchained: How Blockchain And Bitcoin Are Going Mainstream
Please click on the Special Report image to see the full report, which includes a full feature story, videos from Hans-Ole Jochumson on Nasdaq’s efforts in blockchain technology and Adam Honoré, CEO of the fintech consulting firm MarketsTech, as well as the best recent Top Stories on the topic.
U.S. Traders Eye Greek Stock Rebound With Bullish Bets at Record
Inyoung Hwang and Sofia Horta E Costa – Bloomberg
Even as Greece inches closer to default, U.S. traders are more worried about missing out on a rally in the nation’s stocks.
Bullish options bets on an exchange-traded fund tracking Greek shares have risen to a record. There were more than twice as many calls than puts — a higher ratio than on funds tracking equities of Germany, Spain and Italy.
US investors hot for CBOE VIX weekly options
Weekly options, first introduced by the Chicago Board Options Exchange in early 2014, now account for roughly 30% of the total listed volume in US options excluding options on futures.
This is ‘the most worrying thing out there’: Trader
Alex Rosenberg – CNBC
Stock market bears appear to be heading into hibernation. And that makes one professional trader anxious about the next move for the market.
According to the latest survey results from the American Association of Individual Investors, the percentage of investors who believe that stock prices will fall over the next six months has plunged by 13 percentage points to 22 percent, which is the lowest reading since February.
In a separate take on sentiment, MKM derivatives strategist Jim Strugger wrote Thursday that “options market positioning and our general anecdotal sense of activity suggest that equity risk is at its most asymmetric point in a long while.”
“Hedging,” Strugger declared, “is a four-letter word.”
Where Have All the Put Buyers Gone?
Adam Warner – Schaeffer’s Research
Another week, another churn. And as July 4 inches closer, it’s unlikely we get much of anything interesting in CBOE Volatility Index (VIX) Land in the next week. But maybe there’s something brewing in Options Land?
Despite the lack of direction, CNN’s Fear and Greed Index remains in Fear Mode. Well, it’s less Fear than we’ve seen lately, but it’s still modestly red.
Maybe Icahn Knows What He’s Talking About
Helene Meisler – TheStreet
The indexes remain in a chop mode and the majority of stocks remain in downtrends.
What struck me on Thursday was how dismissive folks seemed to be of Carl Icahn’s market call. Now we all know Icahn had a terrific — no, fantastic — trade on Netflix (NFLX) and folks are quick to love him for that, but his market call to take something off the table? Oh boy, has he been dumped on for that.
‘Sell’ recommendations on endangered list
Ben McLannahan – Financial Times
Take a bow, Simon Baker of Société Générale. Among the 53 analysts offering a view on shares in Facebook, he is the only one with the temerity to suggest investors should sell them.
This is not a good market for bears, in general. We are now in the seventh year of a bull run, regularly threatening new highs on the S&P 500. But even now, equity research teams are urging clients to load up. According to an index calculated by Bloomberg, which ranks analysts’ calls on a scale of 1 (strong sell) to 5 (strong buy), the median recommendation on S&P stocks is now a record 3.85. That number has moved steadily higher since the crisis, surpassing anything seen during the dotcom bubble of 1999/2000 (3.73) or the pre-Lehman peaks of 2007/08 (3.74).
Considering Options on a High-Flying A-Shares ETF
Todd Shriber – ETF Trends
China’s A-shares, the stocks trading on mainland exchanges in Shanghai and Shenzhen, have taken a drubbing in recent weeks with the Shanghai Composite down more than 12% since June 12. The benchmark mainland Chinese index slipped another 3.5% during Thursday’s Asian session.
Dramatic declines like those should make investors ponder their options for hedging long positions in A-shares positions or profiting from declines in those stocks. Fortunately, options are now available on the Market Vectors ChinaAMC SME-ChiNext ETF (NYSEArca: CNXT). Options on the A-shares small-cap ETF launched this week and appear to be a well-timed tool for investors looking to profit from further declines or a snapback rally in CNXT.
Commerzbank gets nod for Chinese FX options
Alice Attwood – Futures & Options World
Commerzbank Corporates & Markets has said it has received its licence from the State Administration of Foreign Exchange (SAFE) to trade onshore foreign exchange (FX) options in China.
Exporters, Importers May Get to Write Covered Options
Looking to shore up liquidity of the currency options market, the Reserve Bank of India (RBI) on Thursday proposed to allow exporters and importers to write covered options against their actual contracted export or import exposure.
Under the current regulatory framework, writing of options by the users on a standalone basis is not permitted.
Estimating Crash-Risk Potential For The US Stock Market
James Picerno – Investing.com
History shows rather clearly that the stock market is prone to extreme events, aka crashes. The challenge is deciding when the risk for a repeat performance is unusually high. The literature offers endless possibilities, which is a reminder that the market can crumble for any number of reasons. The leading factor, of course, is the business cycle. But internal market issues can’t be ignored either, including abnormally high valuation. All of which inspires a relatively broad-minded system for monitoring the key risk factors.
The S&P 500 P/E Is 19, Unless It’s Actually 27 as Shiller Says
Michael P Regan – Bloomberg
“Stocks are cheap!” “Stocks are expensive!” It’s one of the oldest debates on Wall Street—and an especially good way to divide investors into competing camps as the U.S. bull market soldiers on in its seventh year.
Each side needs evidence for its arguments, of course, which leads us to competing versions of the price-earnings ratio. The more mainstream metric simply divides the level of an index by the past year’s earnings per share for member companies. A more complex measure of how rich stocks are getting divides the index level by average earnings over 10 years. Yale University economics professor Robert Shiller calls this the CAPE ratio, which stands for cyclically adjusted price-earnings. Others simply call this 10-year version the Shiller P/E for the man who made it famous—the author of the book Irrational Exuberance, which came out in 2000 after an exuberant period that pushed the CAPE ratio to an all-time high.
Euronext further expands spotlight segment with options on Refresco Gerber
Press Release – Euronext
Euronext, the primary exchange in the Eurozone, today expanded its Spotlight segment with options on the shares of Refresco Gerber, the leading European bottler of soft drinks and fruit juices for retailers and A-brand owners. The new options that are available for trading on the Amsterdam market follow the company’s recent successful IPO on Euronext Amsterdam.
How to find the best cyber security insurance for your firm
Matt Rybaltowski – Reuters
A robust cyber security insurance policy can be tricky to procure, even for the most meticulous wealth management firms.
Interest in cyber insurance has surged over the past year following a number of high-profile hackings, including one announced earlier this month involving the U.S. Office of Personnel Management.
The quiet hiring spree for Fintech professionals in China
Thomas Zhang – efinancialcareers
The recent bull-run of China’s stock market has prompted many banks in China to bolster their trading functions, but this has had the knock on effect of increasing demand for technology professionals in the financial sector.
“Because of the increase in front office staff, banks need more technology staff to be able to actually support their business,” says Kavi Kumar, Hong Kong-based head of technology and contracts at the recruiter Selby Jennings. “These Chinese businesses are actually quite attractive to our candidates.”
FxWirePro Bear spreads for hedging EUR/JPY slides
All eyes on Greece but the Euro group again failed to reach an agreement on Thursday. The concerns over the current deadlock in Greek debt negotiations weighed heavily on equity markets and as investors eyed fresh talks due to take place later in the day.
Greece has an obligation to repay EUR1.6 billion to IMF on or before June 30 or face debt defaults which is mounting Grexit pressure and we continue to recommend below strategy on hedging grounds, the pair is likely to sense little bearish downside risks, so let’s stay cautious and in order to arrest these bearish risks diagonal spreads using In-The-Money and Out-Of-The-Money put options are advocated.