Nasdaq to market new options strike listing tech to other exchanges

May 20, 2024

Observations & Insight


Volatility Insight of the Week: Natural Gas Skew Ratio, as measured by CME Group’s Volatility Index, is nearing a 3-month high, suggesting options traders are positioning for upside risk. To learn more about CVOL, please visit HERE.

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Veteran Trader George Hanley Reflects on Trading Career and Family Legacy in Part Three of Open Outcry Traders History Project Interview
JohnLothianNews.com

In the third installment of the Open Outcry Traders History Project interview series, veteran trader George Hanley dives deeper into his trading career, family legacy, and the evolution of his business ventures. Conducted by John Lothian News for the MarketsWiki Education series, this segment offers a comprehensive look at Hanley’s experiences and insights from his time on the trading floors.

Watch the video »

Lead Stories

Nasdaq to market new options strike listing tech to other exchanges; The exchange operator is experimenting with emerging technologies to determine which options strike prices belong in a crowded market, with hopes to sell the tech to its peers.
Emma Hilary Gould – Waters Technology
Last year, Nasdaq began using predictive AI in its US options markets, and now it is looking to sell that tech to others. The exchange operator is in talks with clients to determine if the product, which uses predictive AI to estimate whether an options strike is likely to trade or not, could be used by and sold to other exchanges as part of its market technology business. The initiative, referred to internally as the strike price optimization program, was designed to list options strikes more
/jlne.ws/4bzWqFe

Gaming over? The CFTC’s veerrrry broad definition
Aiden Reiter – Financial Times
The Commodity Futures Trading Commission, a chronicled recipient of Alphaville’s ire, earlier this month proposed a rule change that may ban events contracts from the US derivatives market – potentially ending the multiyear push for options trading on sports games, award ceremonies, and, perhaps most critically, elections. The CFTC’s amendment would expand the types of contracts that can be considered “gaming,” and thus banned under the FTC due to their impact on the “public interest”. As summarised by CFTC Chair Rostin Behnam, with FTAV’s emphasis:
/jlne.ws/4aItA4F

****** Where is the “They are going to push this industry off-shore” argument?

Roaring Kitty Is the Poster Child for Meme-Obsessed Generation T; Younger investors are much more willing to take risks than their elders.
Marcus Ashworth – Bloomberg
After a long period of calm, all it took to reignite the meme stock flames was a cryptic post last week from “Roaring Kitty” showing a character leaning forward in a chair. That’s the moniker used by Keith Gill, who shot to fame in 2021 as he rallied traders on the social media site Reddit around GameStop Corp. He’s the poster child for Generation-T, a new cohort of younger traders with a markedly different approach to investing than their elders.
/jlne.ws/4dPyb7S

Speedier Wall Street Trades Are Putting Global Finance On Edge; Firms of all stripes are preparing for the imminent shift to faster US stock settlement — and the issues it may bring.
Greg Ritchie – Bloomberg
When US markets reopen next Tuesday after the long weekend, everything will likely seem normal. It’s only after the close and in the following days that any cracks are expected to appear.
A spike in the number of failed trades, operational glitches and additional costs are among industry fears as the trading process for American securities accelerates, with the time allowed to complete every transaction halved to a single day.
/jlne.ws/44O0WO4

Copper Hits Record Above $11,000 on Bets That Shortage Looms; Investors have piled up bets as metal faces supply shortfalls
Bloomberg News
Copper surged to its highest-ever level, extending a months-long rally driven by financial investors who’ve piled into the market in anticipation of deepening supply shortages.
Futures on the London Metal Exchange jumped more than 4%, taking copper past $11,000 a ton for the first time, before paring some gains in afternoon trading.
/jlne.ws/3K9Rf2Q

Exchanges

Cboe has a new promotion in London with some Cboe brand cabs.

HKEX Enhances Swap Connect With CFETS And SHCH
Hong Kong Exchanges and Clearing Limited
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce today (Monday) that its clearing subsidiary OTC Clear has implemented three enhancements to Swap Connect in partnership with China Foreign Exchange Trade System (CFETS) and Shanghai Clearing House (SHCH), celebrating the first anniversary of this pioneering derivatives mutual market access programme. The enhancements will provide more flexibility for international investors to manage RMB interest rate risk through China’s onshore interbank markets.
/jlne.ws/3RfUD0j

Strategy

Bank of America details the best hedge for a big stock-market move on Nvidia earnings
Matthew Fox – Markets Insider
All eyes are on Nvidia this week as the company gears up to report its first-quarter results after the closing bell on Wednesday.
The chip maker’s earnings report could drive a big move in the stock market, both to the upside or downside, depending on how the results shake out.
/jlne.ws/3QXmHVR

Education

Understanding the Life Cycle of an Option Trade
OIC
The life cycle of an option trade starts once an investor, with an approved option trading account, and who has placed an order for a trade receives a fill notification for an option order that was entered into a trading platform, routed to, and then subsequently filled on an options exchange. Even though that process may appear straightforward, the reality is more complex than the summary suggests.
With every one of the millions of options contracts traded per day, there are numerous required steps and participants operating behind the scenes to ensure that each contract makes it all the way through to settlement.
/jlne.ws/4aoDecn

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Lead Stories The Stock Market Has Rarely Been This Sleepy Gunjan Banerji - The Wall Street Journal It's eerily calm out there in the stock market. The Cboe Volatility Index, or VIX, dropped below 12 last week, a nearly five-year low. The gauge, based on options prices...