Oil Options Market Flows Suggest Pemex Has Started 2022 Hedging

Dec 21, 2021

Observations & Insight

The FIA is holding its 2021 Annual ETD Volume Review on January 26, 2022 at 9:30 a.m. ET, with host Will Acworth, senior vp for data publications and research at FIA, and speaker Mike du Plessis, senior managing director, agency execution at TP ICAP. They will discuss trends in trading activity in the global futures and options markets. You can go here to register.~SR

Lead Stories

Oil Options Market Flows Suggest Pemex Has Started 2022 Hedging
Devika Krishna Kumar and Michael Roschnotti – Bloomberg
More than 23 million barrels of certain crude options traded since Dec. 10, suggesting a major player is hedging against lower oil prices to protect 2022 revenues.
According to Bloomberg’s analysis of trading data, a significant volume of average-price option put spreads traded during that period. These trades involve simultaneously buying a higher-priced put option — giving the holder the right to sell at a pre-determined level — and selling a lower price put, acting as insurance in case prices collapse.

2021 Bitcoin (BTC) Crypto Market Volatility Still Fluctuating, No End in Sight
Vildana Hajric and Katherine Greifeld – Bloomberg
Cryptocurrency trader Stephane Ouellette has a special alarm that sounds whenever digital-asset prices post sudden outsize declines. That alarm blared at 2:30 a.m. on Saturday, Dec. 4, when Bitcoin fell 20% in a matter of minutes—and once Ouellette woke up, he never went back to sleep.
Ouellette was busy long into the next afternoon, dialing up his teammates and checking on prices even as the market settled down. It wasn’t the first time this year that he had to log such long weekend hours as a result of a sudden Bitcoin slump. And chances are, his alarm will come in handy again soon.

Cryptocurrency Funds Boom in 2021 Led By Proshares Bitcoin Strategy ETF (BITO)
Katherine Greifeld – Bloomberg
Even beyond the launch of the first U.S. Bitcoin futures ETF, cryptocurrency funds notched some notable global milestones in 2021.
The number of crypto-tracking investment vehicles worldwide more than doubled to 80 from just 35 at the end of 2020, according to Bloomberg Intelligence data. Assets soared to $63 billion, compared to $24 billion at the start of the year.

Tesla (TSLA) Sends S&P 500 Crowd on a Wild Ride of Surges and Crashes
Esha Dey and Elena Popina – Bloomberg
There was a sense among Wall Street types a year ago that Tesla Inc.’s entrance into the S&P 500 Index would calm the stock. Sure, it would still have sporadic moments of Elon Musk-driven swings — up 5% Tuesday, down 5% Wednesday — but overall, it would behave more like a proper, staid member of the blue-blooded community it was joining.
They were wrong.

Booming U.S. Economy Ripples World-Wide
Tom Fairless – WSJ
A booming U.S. economy is rippling around the world, leaving global supply chains struggling to keep up and pushing up prices.
The force of the American expansion is also inducing overseas companies to invest in the U.S., betting that the growth is still accelerating and will outpace other major economies.
U.S. consumers, flush with trillions of dollars of fiscal stimulus, are snapping up manufactured goods and scarce materials.

Bullish options data gives confidence to Ethereum and Bitcoin investors
Patrick Huston – BollyInside (India)
Large options exchanges that appear to be betting on a year-end rally for ethereum (ETH), and more exorbitant costs for bitcoin (BTC) in January, are standing out enough to be noticed of some crypto traders. The bullish wagers on BTC and ETH were seen on Deribit, the crypto derivatives trade that accounts for most of volume and open revenue in the BTC and ETH choices market. Deribit Insights initially shared the data on Twitter, saying that one enormous asset has spent USD 4m on bullish ETH call choices terminating before the end of December with strike costs of USD 4,200 and 4,400. They said that a person “whale” has enjoyed USD 2m on BTC call choices with a strike cost of USD 55,000 expiring in January.


ICE Transitions Sterling and Euroswiss LIBOR-based Derivatives to SONIA and SARON Ahead of Sterling and Swiss Franc LIBOR Cessation
Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, today announced that it has transitioned all open interest held in its LIBOR-based Three Month Sterling futures and options and Three Month Euro Swiss Franc (Euroswiss) futures into their risk free rate (RFR) equivalent contracts, Three Month SONIA Index futures and options and Three Month SARON Index futures.
The transition took place following the close of business on December 17, 2021.

HKEX in 2021: Year in Review
Hong Kong Exchanges and Clearing Limited (HKEX) has had a very busy 2021, reporting record nine-month results and trading volumes and further elevating its competitiveness and attractiveness as the region’s premier international financial market. Whilst the ongoing Covid-19 pandemic continued to impact global economies, Hong Kong’s financial markets have remained vibrant, resilient, and robust, with average daily turnover in HKEX’s cash equities market rising 32 percent from a year earlier, and average daily volume of HKEX’s derivatives market recorded a 3 per cent increase.

VIX ETFs Jump as Volatility Grips U.S. Markets
Max Chen – ETF Trends
The Cboe Volatility Index and VIX-related exchange traded funds spiked on Monday as the S&P 500 was on pace for its biggest three-day pullback since May, with traders focused on rising COVID-19 Omicron infections and President Joe Biden’s economic agenda at risk.
Among the best-performing non-leveraged ETFs of Friday, the iPath Series B S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX) increased 6.3% and the ProShares VIX Short-Term Futures ETF (NYSEArca: VIXY) advanced 6.2%. Meanwhile, the CBOE Volatility Index climbed 10.2% to 23.8.


Christmas 2018 Again? Market Veterans Wait to Buy Bigger Dip
Denitsa Tsekova – Bloomberg
Die-hard dip buyers are bracing for even more volatility — and bigger, more enticing dips — in the run-up to Christmas.
Stocks are duly bouncing Tuesday after the biggest three-day drop in the S&P 500 since September, but seasoned veterans are watching and waiting.

Dow up 500 points, stocks near session highs in afternoon trade as energy, financials rally
Joy Wiltermuth and William Watts – MarketWatch
U.S. stock indexes rebounded Tuesday, after a sharp sell off in the past three sessions, as the Biden administration prepared to outline its plan to fight rising COVID-19 cases driven by the omicron variant.
Investors also were encouraged by news Monday that the Senate will vote on President Biden’s Build Back Better economic plan in January despite Democratic Sen. Joe Manchin’s opposition to it, suggesting further negotiations with the West Virginia lawmaker are likely.

Top 3 Hedge Funds Betting Against GameStop Stock
Bernard Zambonin – TheStreet
After a painful drop since their peak on November 22, GameStop GME shares have finally found their way up again, trading 13% higher in the past week. Still, as GME shareholders — AKA the “Ape Army” — hold on for bigger gains, hedge funds continue to short the stock.

Remember: With Options, Volatility is Your Friend
Real Money’s Paul Price offers tips and tricks for the increasingly popular financial instruments.
Eric Reed – The Street
Options trading has become increasingly mainstream with the rise of online brokerages. Once an esoteric area of finance reserved for professionals, more and more retail investors have been jumping into these derivative assets.
That can be a very good thing, since diversification is generally a strong move for any portfolio. However, novice retail investors should be very careful before trading any sophisticated product. Options can be riskier than they appear, especially since many predatory trading sites like to portray them as nearly risk-free.


TradeZero Expands Its Brooklyn Offices in Industry City
TradeZero Holding Corp. (“TradeZero”) and its broker-dealer subsidiaries, which provide next-generation online trading platforms for active retail traders, announced that the company has leased 6,800 square feet to expand its offices in Industry City, Brooklyn. TradeZero, which currently leases 1,800 square feet at Industry City, plans to move in early 2022.


American Workers Are Burned Out, and Bosses Are Struggling to Respond
Te-Ping Chen and Ray A. Smith – WSJ
In the first 10 months of this year, America’s workers handed in nearly 39 million resignations, the highest number since tracking began in 2000.
Some want better jobs. Others, a better work-life balance. Still others want a complete break from the corporate grind. Almost two years into the pandemic that left millions doing their jobs from home, many Americans are rethinking their relationship with work.

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The Spread

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