Observations & Insight
Manager Who Timed March Bottom Cuts Risk With ‘Alarm’ Sounding
Sarah Ponczek – Bloomberg
Back on March 20, three days and less than three percentage points from the stock bottom, Pacific Life Fund Advisors decided it was time to up their portfolios’ risk exposure. Now, the $32 billion money manager is reversing that trade.
The way Max Gokhman, the firm’s head of asset allocation, sees it, there’s no way stocks are fairly valued with the S&P 500 Index back near January levels and the economy significantly worse off than it was then. With coronavirus cases climbing, fiscal stimulus in question and political risks rising, negative catalysts abound.
Stocks jittery as record U.S. virus count curbs risk appetite
Thyagaraju Adinarayan – Reuters
World stocks were choppy and oil prices faltered on Friday as record numbers of new coronavirus cases in several U.S. states raised concerns that more lockdowns may be necessary, making a quick economic recovery unlikely. The approach of the second-quarter earnings season, expected to be the worst for Europe and the United States since the 2008/09 financial crisis, also pushed investors to chase safe-haven assets, such as U.S. Treasuries and the Japanese yen.
Video: Citadel Securities’ Mecane Says Volatility Behind Rise in Retail Investing
Joseph Mecane, head of execution services at Citadel Securities, discusses the growth in retail investing and the outlook for initial public offerings on “Bloomberg Markets: European Open.”
What Can Moneyness in Options Trading Tell Us About Investing?
John D’Antona Jr. – Traders Magazine
Does activity in equity derivatives play a role in the price discovery process of the underlying stocks? And does the flow of information about the stock drive the dynamics of its option volume distribution and the associated return predictability? Given the current economic environment, more than ever traders are looking to the options market to try to glean information. New research offers interesting insights on what this data might reveal and how it can be used.
Traders Bet on Rally for China’s Markets
Gunjan Banerji – WSJ
A dramatic rally in shares of Chinese companies has unleashed a frenzy of trading activity, with many investors positioning for an even bigger advance. The Shanghai Composite rose for eight consecutive trading days through Thursday, climbing 16.5% over that stretch—the largest eight-day percentage gain since May 2008 and the biggest eight-day point gain since June 2015, according to Dow Jones Market Data. The index handed back a fraction of those gains on Friday, declining 1.9%.
Exchanges and Clearing
Nasdaq Records Solid Equity Trading in June, Fixed Income Falls YoY
Celeste Skinner – Finance Magnates
Nasdaq joins a growing list of trading providers to report an uptick in volumes during the month of June, with the exchange operator seeing an uptick across equities, fixed income and commodities. In the month of June, which is historically a pretty quiet month due to the summer period, the number of US equity options contracts traded on Nasdaq was 230 million. Surprisingly, this is the strongest trading volume the company has achieved all year – even higher than that achieved in March.
MIAX Exchange Group – Options Markets – Corporate Action Alert: PolyOne Corporation (POL) name and symbol change to Avient Corporation (AVNT)
The Options Clearing Corporation (OCC) has been informed that PolyOne Corporation (POL) will change its name, trading symbol and CUSIP to Avient Corporation (AVNT), CUSIP 05368V106. As a result, option symbol POL will also change to AVNT effective at the opening of business on July 13, 2020.
Special Executive Report S-8624
Amendments to the Options on the South African Rand/US Dollar (ZAR/USD) Futures and the Options on the Russian Ruble/US Dollar (RUB/USD) Futures Contracts and Temporary Suspension of Trading and Clearing
CME Group Foundation Awards Over $1 Million in Grants to Further Support Education Initiatives Across Chicago
CME Group Foundation today announced that it has awarded over $1 million in grants to further support education initiatives across Chicago. This funding will help ensure that students continue to have access to quality educational resources, and that learning initiatives at every level remain impactful at a time when students and educators face unique challenges and uncertainty.
Regulation & Enforcement
Options Regulatory Alert #2020 – 27 UPDATED – PHLX, NOM, BX, ISE, GEMX and MRX – Quarterly Quote Spread Parameter Relief through September 18, 2020
Effective July 13, 2020, 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 September 18, 2020. The exchanges may, in their discretion, amend these requirements by providing notice to members.
Dash Plans Redesigned OEMS Release for Q4; Blaze 7 will feature an enhanced, integrated suite for options volatility traders.
Rebecca Natale – Waters Technology
Dash Financial Technologies will release its newly rebuilt front end, dubbed Blaze 7, in Q4 of this year, and it will feature a new volatility trading product suite.
Getting to Know Henry Schwartz
Henry Schwartz’s career has come full circle. The founder of Trade Alert and now Cboe’s Senior Director, Head of Product Intelligence, found his love for the options industry on Cboe’s trading floor as a runner in the OEX pit. “At the time, there were hundreds of people in every pit — it was absolute chaos, but I liked it. I liked the technology and the mental challenges,” Henry says. “I was hooked.” After college, Henry stayed in trading for about five years before going to work at a bank on the institutional flow side, where he found a need for better market insight.
Market Volatility Is Back. Here’s How to Manage Investment Risk.
Daren Fonda – Barron’s
With market volatility picking up lately, it might seem like a good idea to hedge your portfolio against another downturn.
Stock valuations are high, according to many measures, and the market may be overly optimistic about an economic recovery and a rebound in corporate profits next year—especially if the recent wave of coronavirus cases continues to rise.
Is it too volatile to invest now?
Julia Rees – FT
The US equity volatility index VIX topped 80 back in March, signalling a crisis of confidence akin to that in the Global Financial Crisis. It subsequently settled below 50, a level not touched since 2008. As investors seek to balance the difficulty of the current situation and potentially position their portfolios for a recovery, they might wonder – are these elevated levels in the VIX an indication that markets are too volatile to invest?
Robinhood HQ got bulletproof glass after frustrated traders showed up: report
Graham Rapier – Business Insider
So many frustrated traders have showed up at Robinhood’s Silicon Valley headquarters that the stock-trading app installed bulletproof glass, The New York Times reported this week.
An explosion of stock-market volatility as the global economy grapples with a pandemic, coupled with record unemployment, has caused a surge in interest for the app, which pioneered commission-free stock trading for a much younger audience than traditional brokerages.
Retail traders make up nearly 25% of the stock market following COVID-driven volatility, Citadel Securities says
Ben Winck – Markets Insider
Retail investors now account for roughly 20% of stock-market activity on average and nearly one-quarter of trades on peak days, Joe Mecane, the head of execution services at Citadel Securities, said in an interview on Bloomberg TV on Thursday.
The U.S. Is Bailing Out Companies. Regeneron Doesn’t Need the Help.
Ben Levisohn – Barron’s
Next time you open your brokerage statement, remember to thank Uncle Sam. Be grateful for the Federal Reserve, whose bond buying has gone far beyond anything it did during the 2007-09 financial crisis and helped put a floor under the stock market. Be appreciative of our elected officials, who acted quickly to get money into the hands of the unemployed, small businesses, and even large corporations in need. But don’t forget the little things.