JPM sees signs of VIX fix working; Goldman’s new team; BNY’s FX options
Observations & Insight
Spencer Doar – JLN
One of yesterday’s top stories was Bloomberg’s Rare Shift in ‘Fear Gauge’ Shows Depth of Market Angst. At the time we published, the front month July VIX futures contract traded higher than August by more than .5 – defying the curve’s normal contango. However, that is a far cry from when the whole curve went into backwardation after the early Feb blowup and by the end of Monday that inversion was down to .08. By the time of publishing, that particular kink in the curve went away.
Today’s open plotted with today’s curve (as of publishing time)
Also, it looks like Canada is ready to impose steel tariffs and quotas on steel to avoid a huge influx of steel from folks looking to avoid U.S. tariffs.
Finding Opportunity: Peter Lenardos, CFO, Cinnober Says Growth and Profitability Are Coming
Jim Kharouf – JLN
Cinnober has built its reputation in the industry as a pioneer and an opportunistic company that looks for new ways to address market needs. So in many ways it was not surprising the firm hired Peter Lenardos as its new CFO two weeks ago. With his background in investment research at Royal Bank of Canada and elsewhere, he has watched the industry through a specific lens that focuses on the financial condition of a company, as well as its strategic positioning.
Cboe Raised at JPMorgan on Signs of a VIX Fix
Felice Maranz and Luke Kawa – Bloomberg (SUBSCRIPTION)
JPMorgan upgrades Cboe Global Markets Inc. to neutral from underweight as volumes and open interest show “a number of signs of stabilization,” albeit at lower levels, analysts including Kenneth Worthington write in a note.
Goldman Sachs has created a new team to take on high-speed traders like Virtu and Citadel at their own game
Dakin Campbell and Frank Chaparro – Business Insider Prime (SUBSCRIPTION)
Goldman Sachs is hoping a brand new technology team will help the trading giant better compete with the fastest traders on Wall Street; Raj Mahajan, who joined the firm in 2015, will run the new group alongside Konstantin Shakhnovich and Ezra Nahum.
Goldman Sachs is taking a bold step to improve teamwork in its securities division and better compete with the fastest traders on Wall Street.
****I take it this means that Goldman is also getting into the shortwave radio game?
BNY Mellon Complements Foreign Exchange Offering, Launches FX Options
Sam Osterman joined BNY Mellon in January to head the new options business.
Wells Fargo Brokers Loved Structured Notes
Matt Levine – Bloomberg (SUBSCRIPTION)
The way a lot of bank structured notes work is that you give the bank $100, and in a few years, if the S&P 500 index or whatever is up, the bank gives you back more than $100, based on some multiple of the index’s performance. If the index is down, though, the bank gives you back your $100. Heads you win, tails you don’t lose: You get a guaranteed return of your principal plus some extra money if the stock market does well. The bank has sold you a bond (or a certificate of deposit), and instead of paying you interest on that bond, it uses the interest to buy an option on the S&P 500 or whatever. You get the combination of (1) a bond that doesn’t pay interest and (2) a “free” option.
Has the Big Yuan Short Finally Arrived?
Nathaniel Taplin – WSJ (SUBSCRIPTION)
Chinese markets are in trouble once again.
China’s currency is down nearly 1% from Friday’s close, wiping out the yuan’s gains for the year, after the People’s Bank of China cut reserve requirements for banks over the weekend. Slowing growth and rising trade tensions are pummeling Chinese shares, with the Shanghai Composite entering a bear market Tuesday. And rising defaults are testing the country’s gargantuan debt market.
****Full blown bear.
Exchanges and Clearing
CME to add options for Black Sea grain futures
CME Group is to introduce options contracts for its Black Sea wheat and corn futures as it seeks to further develop the derivatives targeting a major export zone.
“Interest in our MSCI options has increased”: Three questions for Ralf Huesmann
The June roll in the MSCI derivatives has just come to an end. We spoke to Ralf Huesmann, Eurex Product Research and Development, about how the segment has developed recently.
Reminder: Nasdaq ISE Introduces Nasdaq-100 Reduced Value Index Options
As announced in OTA #2018-22, Nasdaq ISE (ISE) will list for trading options on NQX, which is 1/5 the notional value of the Nasdaq-100 (NDX).
Nasdaq-100 Reduced Value Index Options (NQX) Pricing
Effective June 26, 2018 , Nasdaq ISE (ISE), will be listing series in the Nasdaq-100 Reduced Value Index (NQX).
MIAX Exchanges Holiday Schedule
Please be advised that the MIAX Exchanges will have an abbreviated trading session on Tuesday, July 3, 2018. All Option Classes will close 3 hours early.
Regulation & Enforcement
EU signals no easing up on financial market access after Brexit
Huw Jones – Reuters
The European Union’s default market access for foreign financial firms will not be eased for Britain after Brexit and improvements to the equivalence regime will apply to all third countries, an EU official told Reuters.
Beeks Financial Cloud Expands Asian Footprint, Linking to SGX Datacentre
Jeff Patterson – Finance Magnates
Financial markets infrastructure provider, Beeks Financial Cloud, has strengthened its connectivity once again. The group has added Singapore as it newest datacentre location, taking space within Singapore Exchange’s (SGX) own colocation facility. The effort will help Beeks expand its cloud and hosting services in Asia.
Investor Makes Massive Bet That China Could Scuttle Qualcomm-NXP Deal
Gunjan Banerji – WSJ (SUBSCRIPTION)
One investor made a gigantic options bet this week that China could quash Qualcomm’s $44 billion bid to buy NXP Semiconductors, the world’s largest developer of chips for automobiles.
An options trade on NXP stock costing $32 million changed hands Monday, according to data provider Trade Alert. It consisted of buying put option contracts on the company expiring in January, while also selling puts that expire in July and August.
Still not late to play VIX options to hedge amid trade fear volatility, says Shawn Cruz (VIDEO)
TD Ameritrade’s trader strategy manager also tells Reuters’ Fred Katayama that Harley-Davidson’s decision to shift some production overseas shows there may be long-term implications from the tit-for-tat EU-US skirmish over trade.