NYSE Plans Bitcoin Options, Bringing Another TradFi Giant Into Crypto; Lightning strikes: Options boom threatens data overload

May 29, 2024

Observations & Insight

WFE 10th Annual Sustainability Survey finds exchanges focused on own governance; Green Equity Principles; and growth in sustainable investment products.
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CHICAGO – Stock exchange leaders globally are leading by example by strengthening their own sustainability capabilities, while meeting increased demand for sustainability and ESG-related products.

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Lead Stories

NYSE Plans Bitcoin Options, Bringing Another TradFi Giant Into Crypto; CoinDesk Indices’ XBX is currently the benchmark for $20 billion in ETF assets under management.
Stephen Alpher – CoinDesk
The New York Stock Exchange plans to list index options tracking the price of bitcoin (BTC), bringing another traditional finance giant into the cryptocurrency space. The cash-settled derivatives will track the CoinDesk Bitcoin Price Index (XBX), a 10-year-old benchmark operated by this news organization’s corporate sibling, CoinDesk Indices. The XBX is currently the benchmark for $20 billion in exchange-traded fund assets under management, according to the Wednesday press release announcing the partnership.
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Lightning strikes: Options boom threatens data overload; Concerns over creaking infrastructure in US options markets are fueling talk of measures to limit the exponential amount of data being generated.
Emma Hilary Gould – Waters Technology
More than 11 billion options were traded on US exchanges in 2023, up from about four billion a decade ago. But unprecedented interest in these securities—and the profits they have generated—hasn’t come without a price. Some US options market participants are calling for a re-evaluation of the number of strikes listed by exchanges. The strategy, often called strike or quote mitigation, has received renewed attention amid capacity concerns surrounding the Options Price Reporting Authority (Opra).
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After 24 S&P 500 Records, Options Traders Running Low on FOMO; Investors aren’t paying up for further-away call options; Options dealers are seen buying into any stock market dips
Carly Wanna and Natalia Kniazhevich – Bloomberg
There’s a frenzy-like quality to the rally on Wall Street right now that has many drawing comparisons to the stocks-only-go-up mania of the early days of the pandemic. All major gauges are at or near record highs, fifty-seven stocks in the Nasdaq Composite Index have gained more than 150% already this year, and meme stocks are suddenly, and seemingly randomly, popping once again.
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The New York Stock Exchange Announces Collaboration with CoinDesk Indices to Launch Financial Products Tracking Spot Bitcoin Prices; Developing options contracts tied to the CoinDesk Bitcoin Price Index (XBX); Contracts would be subject to regulatory approvals
New York Stock Exchange
The New York Stock Exchange, part of Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of technology and data, today announced it is collaborating with CoinDesk Indices to launch cash-settled index options tracking the CoinDesk Bitcoin Price Index (XBX), the longest-operating spot bitcoin index. ICE and the NYSE intend to work with CoinDesk Indices and the relevant regulatory agencies to develop specific product offerings. Last year, ICE Futures Singapore collaborated with CoinDesk Indices to update its bitcoin futures contracts, CoinDesk Bitcoin Futures (BMC), to utilize XBX for its monthly contract settlement.
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Trader Buys 2M Dogecoin Call Options as Meme Coin Market Heats Up; The options will expire on June 14 and have a strike price of $0.22 or about 31% higher than the current price.
Oliver Knight – CoinDesk
A trader bought two million dogecoin (DOGE) call options at a strike price of $0.22 on Wednesday, according to Bernd Sischka, chief commercial officer at derivatives exchange PowerTrade. DOGE is currently trading $0.166 and the call options purchased expire on June 14, which means that the popular meme coin will have to rise by more than 31% for the trade to be profitable. Options are a derivative contracts that give buyer the right to either buy or sell an asset at a predetermined price before the contract expires. If the underlying asset doesn’t reach the strike price, that contract will expire worthless.
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Exchanges

Cboe Global Markets Plans to Expand Credit Futures Offering with Launch of Cboe iBoxx $ Emerging Market Bond Index Futures
Cboe Global Markets
Cboe iBoxx $ Emerging Market Bond Index (IEMD) futures to provide exposure to emerging market debt; Futures expected to begin trading on June 17, subject to regulatory review; Offering expands Cboe’s current credit toolkit, which includes U.S. corporate bond futures and options on futures. Cboe Global Markets, Inc. (Cboe: CBOE), the world’s leading derivatives and securities exchange network, announced plans to list Cboe iBoxx $ Emerging Market Bond Index futures (ticker: IEMD) for trading on Cboe Futures Exchange, LLC (CFE) beginning on June 17, subject to regulatory review. The IEMD futures will be based on the S&P Dow Jones Indices’ iBoxx USD Liquid Emerging Market Sovereigns & Sub-Sovereigns Index (ticker: IBXXEMLQ).
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CME Group U.S. Treasury Complex Surpasses Record 34 Million Contracts
CME Group
CME Group, the world’s leading derivatives marketplace, today announced that volume in its deeply liquid U.S. Treasury complex set a new record of 34,350,339 contracts traded on May 28, surpassing the previous record of 33,322,608 contracts on November 27, 2023. “Investors seeking to navigate historic levels of debt issuance and persistent uncertainty are turning to our U.S. Treasury complex in record numbers to access the world’s most liquid, flexible and efficient risk management offerings,” said Agha Mirza, CME Group Global Head of Rates and OTC Products. “In advance of the Treasury market move toward central clearing, we are also seeing new open interest records as our leading network of buyside participants continues to grow and we explore more opportunities to extend cost savings across portfolios.”
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Ether options trading volume on CME hits new peak in May
Brian McGleenon – The Block
According to data from The Block, the monthly trading volume of CME options on ether futures reached an all-time high in May. Ether implied volatility has experienced a notable surge alongside spot ether ETF news. Monthly trading volumes of Chicago Mercantile Exchange options on ether futures have reached an all-time high this month. According to The Block’s Data Dashboard, the trading volume of options on ether futures on the CME reached $1.26 billion for May, with two days remaining in the month. This represents a significant increase compared to April’s volume of $615.75 million and sets a record high for monthly trading volume, according to The Block’s data.
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Cboe Global Markets to Present at the Piper Sandler Global Exchange and Trading Conference on June 5
Cboe Global Markets
Cboe Global Markets, Inc. (Cboe: CBOE), the world’s leading derivatives and securities exchange network, announced today that Fredric Tomczyk, Chief Executive Officer, and Jill Griebenow, Executive Vice President and Chief Financial Officer, will present at the Piper Sandler Global Exchange and Trading Conference in New York City on Wednesday, June 5 at 2:00 p.m. ET. The live webcast and replay of the presentation will be accessible at www.cboe.com in the Investor Relations section, under Events and Presentations. The archived webcast is expected to be available within an hour of the presentation.
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BOX Options Stays Ahead of the Curve
Anna Lyudvig – Traders Magazine
BOX Options is always trying to find a niche and deliver value to their customers and the industry, according to CEO Patrick Zielinski. This year the Exchange is celebrating its 20th anniversary, but since its launch, BOX has revolutionized equity options trading. Patrick Zielinski “We’re a different business now, but we’ve always been an innovator in the space,” Zielinski told Traders Magazine. Jointly owned by TMX Group and leading broker-dealers, BOX invented the price improvement auctions, Zielinski said, adding said that back then options were “traded in nickels and dimes and the price improvement auction created a way to create competition within the spread, and generate pricing incurrence in the industry”.
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Best Global Exchange Group: Nasdaq
Anna Lyudvig – Traders Magazine
Traders Magazine spoke with Greg Ferrari, Head of Exchange Business Management for North American Markets and Nikolaj Kosakewitsch, Head of EMS Sales, European Equities & Derivatives, and President of Nasdaq Copenhagen, who won Best Global Exchange Group at the 2024 Markets Choice Awards.
What is your reaction to winning the Award at the 2024 Markets Choice Awards? Greg Ferrari: Nasdaq was thrilled to win the Best Global Exchange Group Award from Markets Media. At Nasdaq, we are committed to redefining the capital markets landscape by continuously pushing boundaries and setting new standards in market operations. We strive to enhance liquidity, resiliency, and integrity across our 18 owned and 130+ operated markets worldwide.
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Transition of Options Pricing Methodology in Certain Financial Power Options Contracts
Intercontinental Exchange, Inc.
This notice is to inform market participants that effective May 29, 2024, the daily settlement of the following options contracts will be priced using the Bachelier model in anticipation of negative strike prices or negative underlying prices.
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First Anniversary of the Listing of Six New Derivatives Products
JPX
Nikkei 225 micro Futures. Nikkei 225 mini Options. 3-Month TONA Futures. S&P/JPX 500 ESG Score Tilted Index Futures. FTSE JPX Net Zero Japan 500 Index Futures. Nikkei 225 Climate Change 1.5°C Target Index Futures. Comment from Yokoyama Ryusuke, President & CEO, Osaka Exchange, Inc. May 29, 2023 marks one year since the listing of six new products on Osaka Exchange. Nikkei 225 micro Futures, Nikkei 225 mini Options, and 3-Month TONA Futures have steadily expanded in trading volume since the second half of last year in response to market fluctuations based on a variety of factors.
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Strategy

A low VIX is positive for stocks
FX Street
The Nasdaq100 and S&P500 indices are showing measured gains, while volatility has declined to levels last seen in January 2020. Many traders are looking at this volatility compression as the calm before the storm, something we saw just over four years ago. The prudent strategy for this market is to “buy on downturns.” A sustained rise in the VIX above 20 would signal the start of a correction. However, history suggests that a VIX decline alone is not enough to predict a market reversal. From May 2018 to January 2020, the index dipped below 12 several times. During that time, the S&P500 index added over 30%, and a “buy on downturns” strategy would have provided even more attractive returns.
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Indian option traders bet on Modi election victory as derivative market booms
Jamie Chisholm – MarketWatch
Option bets on India’s stock market suggest it will move by less than 5% in either direction in the day after the country’s election concludes, a relatively small reaction which points to investors’ belief in the re-election of Narendra Modi’s Bharatiya Janata party. That’s the finding of Bank of America’s global equity derivatives team, which analyzed prices on an Indian equity options market that has boomed in recent years to become by far the biggest in the world by volume.
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Events

2024 Options Industry Conference: Market Landscape: Where We Are and What is Next
Options Insider Special Events
Options Industry Conference, Options Insider Special Events
The macro-environment and the state of the U.S. economy will be among the key topics in this overview of both the current market and what may be on the horizon. Moderator: Stacey Gilbert, Chief Investment Officer, Glenmede Investment Management Panelists: Meaghan Dugan, Head of Options, NYSE Steve Sosnick, Chief Strategist, Interactive Brokers Patrick Zielinski, Chief Executive Officer, BOX Options Exchange
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Wall Street Starts Calling Time on ESG Labels After Backlash

Wall Street Starts Calling Time on ESG Labels After Backlash

First Read Hits & Takes John Lothian & JLN Staff Miami International Holdings, Inc. (MIH) announced that the SEC has approved MIAX Sapphire LLC's application to become a national securities exchange. MIAX Sapphire, MIH's fourth national securities exchange for...

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The Spread

Traders Betting on China Easing Boost Bearish Options on Banks

Observations & Insight Miami International Holdings, Inc. (MIH) announced that the SEC has approved MIAX Sapphire LLC's application to become a national securities exchange. MIAX Sapphire, MIH's fourth national securities exchange for U.S. multi-listed options,...

Past Options Newsletters

Options Bulls Come Out to Play

Options Bulls Come Out to Play

Observations & Insight The CME Group recently announced several product modifications and rule violation penalties. Effective August 5, 2024, additional Treasury Invoice Swaps and Spreads will be available, and starting July 22, 2024, there will be amendments to...

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