Meme-Stock Mania Is Hitting the Options Market, Too

May 14, 2024

Observations & Insight

Derek Haworth of BornTec Emphasizes Data Integrity and Operational Resilience at FIA Conference
JohnLothianNews.com

In an interview with John Lothian News at the FIA International Futures Industry Conference in Boca Raton, FL, Derek Haworth, the founder and CEO of BornTec, underscored the importance of data integrity and operational resilience for firms in the futures industry.

Watch the video »

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Volatility Insight of the Week: Corn skew, as measured by CME Group’s Corn volatility index, is nearing a 9-month high, which suggests options traders are more heavily positioning for upside risk. To learn more about CVOL, please visit HERE.

Lead Stories

Meme-Stock Mania Is Hitting the Options Market, Too
Gunjan Banerji – The Wall Street Journal
Rising shares of meme stocks GameStop and AMC have fueled activity in the options market this week.
Investors have sought risky, bullish bets that would profit if the shares kept soaring. Activity in GameStop and AMC options this week surged to the highest levels since March 2021 and August 2023, respectively, according to Cboe Global Markets. Much of the trading has been concentrated in bets expiring by Friday, with traders placing bold trades on a rapid increase in share prices.
/jlne.ws/3JZvxPd

Options show investor calm ahead of CPI data
Jamie Chisholm – MarketWatch
Muted moves early in the week suggest equity investors are cautious ahead of the inflation data due Tuesday and Wednesday. Cautious, but not anxious if implied volatilities in options are any guide.
Mandy Xu, head of derivatives market intelligence at the Cboe provides the chart below which shows that the 1-month implied volatilities in options on the S&P 500 (SPX), Euro STOXX 50 (SX5E), iShares 20+ Year Treasury Bond ETF (TLT), and iShares iBoxx $ High Yield Corporate Bond ETF (HYG), are at or near their lows of the past year.
/jlne.ws/3ysAFsh

Hedge Funds Rush to Cover Euro Short Bets Ahead of US Inflation; Options traders are most bullish the euro since February
Vassilis Karamanis – Bloomberg
Currency traders are positioning for a stronger euro, betting softer US inflation will bring the outlook for monetary policy on both sides of the Atlantic closer in sync.
Demand for options that pay out if the common currency strengthens against the dollar over the next week rose to the highest since February. Meanwhile, hedge funds and interbank traders have trimmed their euro shorts in the past few sessions, according to Europe-based FX traders familiar with the transactions who asked not to be identified because they aren’t authorized to speak publicly.
/jlne.ws/3wBziHm

GameStop’s Stock Surge Is a Long Way From 2021 Meme-Stock Frenzy; Frenzy in 2021 sparked 1,000% share price gains in a few days; ‘These are always blips, they’re like solar eclipses’: Atwater
Bailey Lipschultz – Bloomberg
GameStop Corp. shares more than doubling on no fundamental news. Short sellers getting squeezed and retail traders using same-day options to amplify gains in otherwise beaten-down stocks. Nonsense crypto coins adding more than 1,000%. That was Monday. But it could just as easily describe early 2021, when the meme-stock frenzy captured the popular imagination and day traders sent stocks on inexplicable wild rides. However a closer look at the magnitude and zaniness back then shows how much further this latest meme mania needs to go to match the original.
/jlne.ws/3wo4dqI

GameStop and AMC shares surge for second day in ‘meme stock’ revival
George Steer – Financial Times
Shares in video game retailer GameStop and cinema group AMC Entertainment surged for a second consecutive session on Tuesday, extending a ferocious “meme stock” rally that was sparked this week by the re-emergence of a popular day trader.
/jlne.ws/3WGcmRJ

It’s Not Just GameStop or AMC. SunPower and More Shorted Meme Stocks Are Flying.
Jack Denton and Adam Clark – Barron’s
This week has ushered in a 2021 redux, with GameStop, AMC, and other stocks rocketing higher on the back of retail investor activity just like they did in the “meme stock frenzy” that gripped markets three years ago.
/jlne.ws/4bVvAHN

Cryptoverse: Retail traders sit out bitcoin rally
Medha Singh – Reuters
What’s happened to the army of retail traders who used to drive bitcoin’s biggest rallies?
U.S. crypto exchange Coinbase (COIN.O), opens new tab reported just $56 billion in consumer trading volumes in the first quarter of 2024, when bitcoin leapt to record heights close to $74,000.
/jlne.ws/3UFBDJi

Exchanges

NYSE US Exchanges to close in observance of Memorial Day
NYSE
In observance of Memorial Day, the New York Stock Exchange, NYSE American Equities, NYSE Arca Equities, NYSE Chicago, NYSE National, NYSE American Options, NYSE Arca Options, and NYSE Bonds markets will be closed on Monday, May 27, 2024.
/jlne.ws/42wc0y8

NYSE American Options, NYSE ARCA Options Service
Effective June 10, 2024, NYSE American Options will re-introduce the Complex CUBE Auction. The new functionality will be available for testing in the Pillar Certification environment on May 24, 2024. To test, please contact Technology Member Services at tms@nyse.com. Additional information about NYSE CUBE Functionality can be found on the CUBE webpage or in the NYSE Options Functional Differences document.
/jlne.ws/3WBXq7r

Trading schedule on the Moscow Exchange in June 2024
MOEX
The Moscow Exchange has determined the rules for operating markets in June 2024. On the holiday June 12, 2024, trading and settlements will not be carried out on the stock, money, derivatives markets, foreign exchange market and precious metals market of the Moscow Exchange. On the remaining days of the month, trading on the exchange markets is carried out according to a standard schedule.
/jlne.ws/3JYNnSr

Regulation & Enforcement

The SEC’s Division of Investment Management will host its annual Conference on Emerging Trends in Asset Management on Thursday, May 16, 2024, starting at 9:00 AM ET. Open to the public both in person and via live webcast, the conference will feature a variety of industry participants and academics. The event will kick off with an introduction by Director Natasha Vij Greiner, followed by a keynote address from Chair Gary Gensler. Throughout the day, attendees will hear from regulatory experts including Andrea Seidt, Erica Y. Williams, and Camille Blackburn, and engage in sessions covering trends in asset management products and strategies, historical and future trends, and technology-driven trends. The conference will conclude with remarks from Director Natasha Vij Greiner. For more details and to register, go HERE.

The SEC will also hold a closed meeting at 2:00 p.m. ET on Thursday, May 16.

CFTC Commissioner Caroline D. Pham is set to speak at the 2024 Digital Chamber Blockchain Summit on May 15, 2024. She will participate in a panel discussion titled “Working Together: CFTC and SEC,” alongside U.S. Securities and Exchange Commissioner Hester Peirce. The event will take place at 2:30 p.m. (EDT) at Capital Turnaround, located at 770 M Street Southeast, Washington, DC.

CFTC Commissioner Christy Goldsmith Romero is scheduled to be a keynote speaker at the Financial Times’ Moral Money Summit on May 22, 2024. The interview will take place from 9:10 am to 9:30 am BST at The Biltmore Mayfair, located at 44 Grosvenor Square in London, United Kingdom. This corresponds to 4:10 am to 4:30 am EDT for viewers in the USA. ~JJL

SEC’s Shadow Trading Win Opens Door for Department of Justice
Jeffrey Brown, Hartley West, Jonathan Streeter – Dechert via Bloomberg
A first-of-its-kind enforcement action from the Securities and Exchange Commission may pique the interest of federal prosecutors, who have been willing to pursue novel securities fraud theories that were first tested successfully by the agency. The SEC convinced a California jury last month that a former executive at biopharmaceutical company Medivation Inc. committed insider trading by buying options in a comparable company, Incyte Corp., within minutes of receiving material nonpublic information, or MNPI, about Medivation’s imminent acquisition.
/jlne.ws/4afwFsp

Moves

Kaitlin Meyer is starting a new position as chief commercial officer at MIAX Futures, she shared on LinkedIn. She was previously vice president of marketing and sales for MIAX. ~JJL

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