Nvidia market cap jumps by $350bn amid ‘gamma squeeze’

Jun 3, 2024

Observations & Insight

Volatility Insight of the Week: Aluminum volatility, as measured by CME Group’s Volatility Index, recently hit a one-year high. To learn more about CVOL, please visitHERE.

Lead Stories

Nvidia market cap jumps by $350bn amid ‘gamma squeeze’; Options trading frenzy fuels wild swings in share price
George Steer – Financial Times
Nvidia has gained $350bn in market value in wildly volatile trading since it reported first-quarter earnings just over a week ago, driven in part by a feedback loop of trading in the chipmaker’s huge options market. The company was valued at $2.69tn by Friday’s close, more than JPMorgan, Berkshire Hathaway and Meta combined, despite a pullback at the end of the week. It has added roughly $350bn since May 23, when it announced surging revenue growth over the first three months of the year. At the peak earlier in the week its value had risen by nearly half a trillion dollars, growing by a sum close to the market capitalisation of Tesla in just a few days.
/jlne.ws/4c33hab

GameStop Shares Double as Gill Post Shows $116 Million Bet
Sangmi Cha and Subrat Patnaik – Bloomberg
GameStop Corp. shares more than doubled after the Reddit account that drove the meme-stock mania of 2021 posted what appeared to be a $116 million position in the game retailer. The June 2 screenshot by Keith Gill, who goes by DeepF- Value on Reddit, shows five million shares bought at $21.27 apiece. It was the account’s first post in three years. The screenshot, which also included 120,000 call options worth $65.7 million due to expire on June 21, couldn’t be verified. The options would allow him to buy the stock at $20 a share.
/jlne.ws/4c0aCaw

Roaring Kitty’s GameStop position worth over $386 million as of Monday morning
Gordon Gottsegen – MarketWatch
After three years of Reddit silence, the investor known as Roaring Kitty revealed on Sunday evening that he was holding a massive GameStop position. As of market open on Monday, that position would be worth over $386 million.
Keith Gill, who goes by Roaring Kitty on X and YouTube and as u/DeepF—ingValue on Reddit, gained notoriety for posting his bull-case theory for GameStop GME on social media. Gill posted about GameStop throughout the second half of 2020 and early 2021, when the meme-stock craze was at its height.
/jlne.ws/456KFnm

Boom in US penny stock trading prompts warnings of frothy markets; Volumes for some sub-$1 shares are above those of Tesla and Apple as retail investors target cheap but volatile names
Jennifer Hughes – Financial Times
A scrap metal merchant and an electric vehicle maker that has sold just four cars top the list of so-called “penny” stocks that are out-trading the likes of Tesla and Apple, prompting some analysts to warn that markets are becoming overheated. Seven of the top 10 most traded US equities in May, as measured by the number of shares bought and sold, are penny stocks worth less than $1, according to Cboe Global Markets. None of the companies are profitable. The huge volumes in so many little-known stocks suggest a renewed appetite among retail investors for cheap names in which they believe they can quickly make a lot of money.
/jlne.ws/4c09oMv

Ex-Millennium Trader Megia Debuts Hedge Fund With $5 Billion
Nishant Kumar – Bloomberg
Millennium Management’s former senior trader Diego Megia kicked off his new hedge fund with $5 billion and closed it to new money on the very first day, becoming one of the largest startups in recent years. As much as $3 billion of the capital for his Taula Capital Management was raised from Millennium and the rest from investors including asset managers, pension plans and sovereign wealth funds, according to a person with knowledge of the matter. Megia’s Millennium colleague Stefan Ericsson joined as deputy chief investment officer at the firm, which started on June 1, the person s
/jlne.ws/3wYKz4O

Exchanges

NYSE Fixes Issue That Showed 99% Drops, Triggered Trading Halts; Stocks including Chipotle and NuScale have resumed trading; NYSE said error related to SIP consolidated pricing feed
Bre Bradham, Katherine Doherty, and Carmen Reinicke – Bloomberg
A technical error at the New York Stock Exchange resulted in numerous erroneous trading volatility halts, including for Chipotle Mexican Grill Inc. and Abbott Laboratories, and odd trades in at least two stocks early in the cash session Monday.
The forced pauses, which began shortly before 9:45 a.m. in New York, were resolved not long after 11 a.m. and the stocks resumed normal trading, according to statements from NYSE. The firm said a technical issue with the “industry-wide” price bands published by the Consolidated Tape Association Securities Information Processor led to the halts.
/jlne.ws/3x4M8OD

NYSE glitch sparks volatility in dozens of stocks
Arasu Kannagi Basil and Sinead Carew – Reuters
A glitch at the New York Stock Exchange triggered massive swings in the shares of Berkshire Hathaway and Barrick Gold, and trading halts in dozens of other companies on Monday, before the bourse fixed the problem.
NYSE, owned by Intercontinental Exchange, by late morning said on its website it had resolved a reported technical issue and that the impacted stocks had resumed trading.
/jlne.ws/3yTkaFU

Technology

MCX wins ‘The Asian Banker Financial Technology Innovation Award’ 2024 for “Best Financial Market Technology Implementation of the Year”.
Multi Commodity Exchange of India Ltd.
The Multi Commodity Exchange of India Ltd. (MCX), India’s largest Exchange in the Commodity Derivatives Market segment, along with its technology partner Tata Consultancy Services (TCS), was awarded “Best Financial Market Technology Implementation of the Year” at The Asian Banker Financial Technology Innovation Awards 2024. The award was in recognition for implementation of an integrated commodity derivatives market platform encompassing trading, risk management, and clearing and settlement.
/jlne.ws/4e8YUfu

Moves

CME Group Appoints John Ricci as Managing Director and Global Head of Agricultural Products
CME Group
CME Group, the world’s leading derivatives marketplace, today announced the appointment of John Ricci as Managing Director and Global Head of Agricultural Products.
Reporting to Derek Sammann, Senior Managing Director and Global Head of Commodities Markets, Ricci will be responsible for leading the development, execution and management of the exchange’s agricultural business globally. He will be based in Chicago.
/jlne.ws/4bFUqeM

Strategy

Trading the Next Earnings Season for European Semiconductors
Cboe
As the world has come to increasingly rely on smartphones, cloud computing, and artificial intelligence (AI), companies in the Semiconductor and Semiconductor Equipment industry have seen strong growth in revenues and earnings in recent years. Europe is home to over 50 different semiconductor companies, of which three of the largest have options listed[1] on Cboe Europe Derivatives Exchange (CEDX) – ASML Holding NV, ASM International NV and Infineon Technologies AG. All three managed to beat their 2024 Q1 analyst consensus estimates for GAAP EPS, and these same analysts report continued expectations of high earnings growth through at least 2026. Institutional investors and traders will now be considering different ways to capture the potential upside or downside move in these shares, depending on whether they expect these companies to continue beating the street versus breaking their streaks with a miss.
This article considers two simple option strategies that might be used to capture the next 10% upside or downside move in a stock over a time horizon spanning the next quarterly earnings report. For these hypothetical examples, we will price options on a fictional semiconductor company named “EuroChips”, which trades at EUR100 per share on 17 May 2024 and pays no dividend.
/jlne.ws/45ay1Ul

These ETFs let you invest like the rich — but you might want to keep your money
Mark Hulbert – MarketWatch
Alternative investments has become one of the fastest-growing segments for retail exchange-traded funds. Individual investors likely will regret this.
Charles Schwab, the largest U.S. discount broker, recently announced that later this year it will launch “an alternative investments platform for individual investors” (according to a report in the Wall Street Journal). The platform would give investors access to alternative investments including “private equity, venture capital, private credit and hedge funds.”
/jlne.ws/3X8FCkG

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Crisis memory, geopolitics and the risks of financial contagion

Crisis memory, geopolitics and the risks of financial contagion

First Read Hits & Takes John Lothian & JLN Staff When Jack A. Wing died in 2011, I realized the industry was losing some of the pioneers of the financial futures era. Wing founded the masters program in financial engineering at the Illinois Institute of Technology,...

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The Spread

The Stock Market Has Rarely Been This Sleepy

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...

Past Options Newsletters

The Stock Market Has Rarely Been This Sleepy

The Stock Market Has Rarely Been This Sleepy

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...