Oil Meme Stock Draws Trading Frenzy in Out-of-the-Money Options
Michael Tobin – Bloomberg
A Texas oil company that’s been the subject of social media speculation in recent weeks is seeing an explosion in trading of out-of-the-money call options, indicating retail traders are betting on another big jump in the shares. Ring Energy Inc. is an industry minnow, selling an average of almost 9,500 barrels of oil in the third quarter. It shares have doubled in less than two weeks. While the stock closed 7% lower Tuesday at $2.14 in New York, September $5 call options traded hands 82,540 times, an increase of more than 31,000% in volume from Monday. It was the eighth-most traded equity option of the day, according to data compiled by Bloomberg.
Stocks aren’t in a bubble, but here’s what is, according to fund manager Cathie Wood
Steve Goldstein – MarketWatch
For all the attention given to the argument that the stock market is in a bubble, it is important to point out that not everyone shares that view.
Few fund managers have been more successful than Cathie Wood, the chief executive of ARK Invest and fund manager of the ARK Innovation ETF and ARK Genomic Revolution ETF, which according to FactSet have drawn in more inflows than any other actively managed stock exchange-traded fund over the last 12 months. In a monthly webinar, Wood made the argument against stocks being in a bubble.
How herd behaviour drives action on r/WallStreetBets
Ian Goldin – Financial Times
From the US Capitol to Wall Street, the power of social media to mobilise crowds is evident everywhere. It has introduced a new risk to the effective functioning of markets as it has to politics, exposing the limitations of politicians and regulators to manage viral campaigns.
The recent price explosion in the stumbling GameStop was portrayed on the r/WallSteetBets sub-forum on the Reddit platform as a just redistribution that took gains from the pockets of “parasitic” hedge funds that had bet against the struggling US video games retailer into the hands of “ordinary” people.
GameStop Frenzy Echoes Sharp Moves Long Seen in Cryptocurrency Markets
Paul Vigna – WSJ
The flash mob that drove up the price of GameStop Corp. and other heavily shorted stocks took Wall Street by surprise. In the cryptocurrency market, such behavior is commonplace.
Groups of investors who organize on social media and target a specific asset—often one small and illiquid enough to be easily influenced—are a staple of the crypto world. Although digital currencies have made inroads with professional investors, they are also still subject to pumping schemes that proliferate on social-media platforms like Discord and Telegram.
Exchanges and Clearing
The NYSE Isn’t Moving—Yet
Stacey Cunningham – WSJ
The New York Stock Exchange belongs in New York. If Albany lawmakers get their way, however, the center of the global financial industry may need to find a new home.
On Wednesday, with more than 25 other representatives of New York’s securities industry, I sent a letter to state legislative leaders cautioning against the unintended consequences of imposing a transfer tax on stock sales. History’s lesson is clear: If you try to squeeze more revenue from financial firms, the business goes elsewhere.
Derivatives client clearer of the year: JP Morgan; Risk Awards 2021: bank avoided tech snags and margin call surprises that plagued peers during crisis
The extreme market volatility unleashed by the Covid-19 pandemic last year tested bank clearing businesses to the limit, resulting in operational mishaps that hurt both the banks and their clients. JP Morgan is a rare exception.
ICE to Launch LNG Freight Futures Based on Spark Commodities’ Assessments in Key Milestone for Global Natural Gas Markets
Intercontinental Exchange, Inc.
New contracts will sit alongside ICE’s fast growing TTF and JKM LNG (Platts) benchmarks; TTF Futures OI +29% y/y; JKM LNG (Platts) Futures and Options OI +37% y/y
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of mortgage technology, data and listings services, announced today that it plans to launch LNG freight futures contracts based on Spark Commodities’ (“Spark”) price assessments, marking a milestone in the evolution of the LNG market.
BOX System Maintenance
BOX Options Market (“BOX”) will perform maintenance on its system on Saturday, February 13, 2021 from 8:00 am EST to 5:00 pm EST. Participants connectivity to BOX may be impacted during that time.
CME Group Inc. Reports Fourth-Quarter and Full-Year 2020 Financial Results
CME Group Inc. today reported financial results for the fourth quarter and full year of 2020. The company reported revenue of $1.1 billion and operating income of $515 million for the fourth quarter of 2020. Net income was $424 million and diluted earnings per share were $1.18. On an adjusted basis, net income was $497 million and diluted earnings per share were $1.39. Financial results presented on an adjusted basis for the fourth quarter of 2020 and 2019 exclude certain items, which are detailed in the reconciliation of non-GAAP results.
Derivatives markets respond to dividend and ESG demands
2020 was an unprecedented year for global derivatives markets as volatility gripped global markets fueled by the spread of COVID-19, the U.S. elections and Brexit negotiations. In this article, Eurex speaks with Daniel Mannion from Susquehanna International Group (SIG) about the impact this had on trading as well as a closer look at the growth of dividend futures, ESG and pro-rata pricing and a look ahead to growth areas in 2021.
Regulation & Enforcement
Amendments to the Three-Month Eurodollar Futures and Options on Three-Month Eurodollar Futures Contracts to Implement USD London Inter-bank Offered Rate (“LIBOR”) Fallback Provisions
Pending Commodity Futures Trading Commission (“CFTC”) approval, Chicago Mercantile Exchange Inc. (“CME” or “Exchange”) will amend the Three-Month Eurodollar Futures and Options on Three-Month Eurodollar Futures contracts (the “Contracts”) to incorporate procedures to apply from the effective date of a permanent discontinuation of the Three-Month USD ICE LIBOR reference rate (“USD LIBOR”) or from the effective date that USD LIBOR is deemed by the UK Financial Conduct Authority (as supervisor of the administrator of USD LIBOR) to be unrepresentative of the underlying market or economic reality (each a “Fallback Event”) (collectively, the “Rule Amendments”) effective on March 29, 2021, subject to regulatory approval.
US stock exchanges sue SEC over data rule changes
Kiran Stacey – FT
The New York Stock Exchange and Nasdaq have sued their regulator over new rules that would force them to share more data in an effort to increase competition in the sector. The exchanges, along with Cboe Global Markets, filed court petitions against the US Securities and Exchange Commission on Tuesday over an attempt by the regulator to make them provide expanded access to their data feeds. The SEC said it wanted to help more investors get high-quality data at the fastest speeds, but the exchanges have warned the rules could undermine their proprietary data businesses, which offer premium data services to the highest-paying users.
Webinar: The Foundations of Options Pricing
Date/time: Feb 10, 2021 3:30 – 4:30 PM CST
Any time you’re buying or selling a financial asset, it’s critical to understand the pricing characteristics of the market you’re in – and the options market certainly has its own unique specifications. That’s why The Options Industry Council (OIC) wants to help you build your knowledge of option pricing.
Registration is open! – FIA Boca 2021
A New Virtual Experience
The Options Industry Conference is Going Virtual in 2021. Join OCC and the options exchanges for the 39th annual Options Industry Conference, April 28-29, 2021. While the conference will be held virtually for the first time in history, the focus will continue to be the key topics facing the options industry today, from the regulatory shifts in the U.S. and Europe to the technological developments that are driving monumental change in markets around the globe.
(Podcast) OBC 121: Mysteries of Theta, Delisted Options, Bitcoin and More…
Options Boot Camp – Options Insider Radio Network
On this episode Mark and Dan answer your questions about:
When does Theta REALLY come out of options prices?
What happens to option premiums when it is delisted?
Is this a good time for a stock replacement strategy?
Audience poll results for 2021 outlook
Our thoughts on the bitcoin options market
Tesla vs. Bitcoin on the race to $1T market cap…