One options trader is betting on an end to the market’s wild swings; September Jobs Report: Unemployment Hits New Low, but Signals Are Mixed

Oct 4, 2019

Observations & Insight

Mike Fishbain – Open Outcry Traders History Project
JohnLothianNews.com

Mike Fishbain is a former open outcry trader at the Chicago Mercantile Exchange. Today he is part of the customer support team at Trading Technologies, a leading provider of trading screen technology to the futures and options markets. He sat for an interview with John Lothian News as part of the MarketsWiki Education Open Outcry Traders History Project.

Watch the video »

Lead Stories

One options trader is betting on an end to the market’s wild swings
Tyler Bailey – CNBC
An optimistic jobs report is helping stocks recover from this week’s brutal sell-off, and helping investors shrug off onrushing recession fears as unemployment hits a new 50-year low and payrolls rise by a better-than-expected 136,000.
As the markets breathe a collective sigh of relief, it’s beginning to look like the volatility that flooded in earlier this week might be leaving as quickly as it entered. Just Thursday, the Cboe Volatility Index (VIX) spiked to 21.44 – its highest level in nearly two months – before finishing safely back in the teens.
/jlne.ws/2oNwnZ1

September Jobs Report: Unemployment Hits New Low, but Signals Are Mixed
Patricia Cohen – NY Times
136,000 jobs were added last month, the government reported on Friday. Analysts surveyed by MarketWatch had expected a gain of about 147,000.
/jlne.ws/30Kqb17

Stocks Rebound After ISM Surprise Shows Powell Put Lives
John Authers – Bloomberg
From Optim-ISM to Pessim-ISM
October isn’t off to a good start, at least if you were hoping to make money in the stock market. Three successive trading days brought unpleasant surprises in the data, and sharp falls. That sets up a potentially exciting Friday, when non-farm payrolls provide a reliable excuse for volatility.
/jlne.ws/2IpC0Do

`WeWork Flu’ Strikes at the Heart of the U.S. Equity Market
Luke Kawa – Bloomberg
Software stocks that constitute the biggest part of the U.S. equity market are teetering, and recent struggles by the cohort of tech unicorns looking to go public aren’t helping.
An exchange-traded fund that tracks the likes of Oracle, Intuit and Autodesk has plunged more than 10% since hitting an all-time high in July — more than double the drop in the S&P 500. It ended Wednesday below its average price for the past 200 days for the first time since January.
/jlne.ws/2ImVjgQ

U.S. Stock Market Drop, Slowdown Demand a Forceful Fed
Robert Burgess – Bloomberg
It was only last week that the S&P 500 Index was near its highest levels since July after recovering from its August sell-off. The thinking was that better-than-forecast data on housing, factory orders and industrial production meant talk of a looming recession was overdone. This week showed that those signs of resilience may have been little more than a mirage.
/jlne.ws/353N5Us

Scant evidence that hedge funds are betting on no-deal Brexit
Bryce Elder – Financial Times
You probably know Occam’s razor, a line of reasoning that says the simplest explanation tends to be the correct one. You might not know its less famous counterpoint, Hickam’s dictum, which advises against oversimplification.
The name refers to Dr John Hickam, erstwhile chairman of medicine at Indiana University, who cautioned against diagnosing a single cause for multiple symptoms. His maxim is most often quoted as: “Patients can have as many diseases as they damn well please.”
/jlne.ws/355SOt1

Why a hard Brexit is a threat to the euro as well as sterling
Katie Martin – Financial Times
With the UK’s messy divorce from the EU clattering towards its conclusion, signs of complacency are popping up in the currency markets. The exchange rate is relatively tranquil. Options markets are showing few signs of concern. If Brexit goes badly, the currency could take a beating. But the currency in question is not the pound — it’s the euro.
/jlne.ws/2VaMaNo

In World of Macro Menace, FX Traders Are Either Clueless or Calm
Anchalee Worrachate – Bloomberg
Facing macro threats on both sides of the Atlantic, traders of currency options appear either remarkably calm or paralyzed by uncertainty.
Right now, investors are weighing everything from the impact of monetary easing in Europe against U.S. rate cuts, to President Donald Trump’s impeachment drama and the global trade conflict. Yet those dramas barely show up in prices for euro-dollar derivatives.
/jlne.ws/32VnAD0

John Authers on Volatility in Stock Market (Radio)
Bloomberg (AUDIO)
John Authers, Senior Editor for Bloomberg Markets, will discuss his column on volatility in the stock market and fears of slowing global growth. Hosted by Lisa Abramowicz and Paul Sweeney.
/jlne.ws/2AGJrlv

Exchanges and Clearing

What Zero Commissions Mean for Brokerages
Barron’s
E*Trade has joined rivals Charles Schwab and TD Ameritrade in eliminating commissions for U.S.-listed stock, ETF and options trades .
Shares of these discount brokerages remain under pressure on worries about the earnings hits from zero commissions and are suffering analyst downgrades, my Barron’s colleague Teresa Rivas reports.
/jlne.ws/2Mg2ubE

Eurex further on the way up: September figures overall satisfying
Eurex Exchange
Eurex, Europe’s largest derivatives exchange and part of Deutsche Börse Group, could enjoy a special highlight with a monthly record in September in Total Return Futures on EURO STOXX 50 with 433,238 traded contracts.
European equity index derivatives as well as European equity derivatives saw double-digit increases with the former up by 11 percent to 98.1 million traded contracts and the latter by 17 percent from 23.7 million traded contracts in September 2018 to 27.6 million in September 2019.
/jlne.ws/2VcZKQp

Regulation & Enforcement

CFTC: Commissioners Shouldn’t Be Forced to Testify
Dylan Tokar – WSJ
The Commodity Futures Trading Commission has asked an appeals court to block an order requiring three of its commissioners to testify over statements the agency published following a market-manipulation settlement.
The derivatives regulator argued in a motion unsealed Wednesday that U.S. District Judge John Robert Blakey had overstepped judicial bounds by ordering the CFTC’s presidentially appointed commissioners to show up in court for a hearing that the judge said could result in a referral for criminal contempt.
/jlne.ws/2Mc14yZ

PTAB Invalidates Third NASDAQ Patent in Favor of MIAX; Finds all 49 Claims Unpatentable
MIAX
Miami International Holdings, Inc. (MIH), the parent holding company of the MIAX Options, MIAX PEARL and MIAX Emerald exchanges (MIAX), today announced that a third Nasdaq patent asserted against MIAX as part of its infringement complaint has been found invalid by the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office. In its final written decision, the PTAB ruled that all 49 claims of Nasdaq’s U.S. Patent No. 7,921,051 are unpatentable under 35 U.S.C. Section 101.
/jlne.ws/2K3gU18

U.S. regulator fines RBC Capital Markets $5 million for unlawful trades
Nichola Saminather – Reuters
RBC Capital Markets has been fined $5 million (C$6.7 million) by the U.S. Commodities and Futures Trading Commission for failures that resulted in unlawful trades and other violations between at least late 2011 and May 2017.
Between December 2011 and October 2015, RBC Capital Markets (RBCCM), a unit of Canada’s biggest lender, Royal Bank of Canada (RY.TO), engaged in at least 385 non-competitive, fictitious or unlawful trades, the CFTC said in a statement on its website here on Tuesday.
/jlne.ws/3317ckh

The validity of options under SCRA raised some fundamental issues
Shailaja Lall and Shivangi Talwar – India Business Law Journal
The Bombay High Court, in Edelweiss Financial Services Ltd v Percept Finserve Pvt Ltd and Ors, held that a put option in a share purchase agreement (SPA) was neither a forward contract, nor a ‘contract in derivative’ within the meaning of the Securities Contracts (Regulation) Act, 1956 (SCRA).
/jlne.ws/2Or9ZPA

Technology

The golden age of tech growth may be coming to an end
Richard Waters – FT
What price growth? In a period when many companies have looked to juice their earnings by cutting costs rather than investing in the future, tech has provided a rare shot in the arm for growth-starved investors. This week’s downward lurch in the stock market is the latest sign that things are starting to change. Third-quarter financial results over the coming weeks will provide a chance to reassess. The questions starting to percolate to the top of investors’ minds: What has it cost to deliver the kind of growth the market has been clamouring for — and will a slowing economy finally force a rethink about how long the growth spurt can go on?
/jlne.ws/2MiZSK2

Moves

Former Goldman Sachs vice-chair joins Ken Griffin’s Citadel fund
Robert Armstrong and Lindsay Fortado – Financial Times
Pablo Salame, a former Goldman Sachs vice-chairman and co-head of securities, will join Citadel, the $32bn hedge fund run by Chicago billionaire Ken Griffin, as its head of global credit.
Citadel, which manages $32bn in assets, has been on a hiring tear this year. It brought on three new fund managers specialising in bonds and currencies over the summer, including another Goldman alum, Jonathan Bayliss. In February it hired Samantha Greenberg, an equity trader and founder Margate Capital.
/jlne.ws/337aYIP

****JB: On a side note, Ken Griffin just bought the Museum of Science and Industry in Chicago. Ok…he didn’t “buy” it…but it is now called the Kenneth C. Griffin Museum of Science & Industry. The things money can buy.

Strategy

Trump Is Set to Focus on Health Care. Expect Volatility for the Stocks.
Josh Nathan-Kazis – Barron’s
President Donald Trump will be talking about health care this afternoon, pulling the industry into the battle over his political future.
The president will issue an executive order on Medicare that could bump up health-care stocks a bit. But the speech, in which the president will seek to take control of a news cycle filled with impeachment drama, suggests that a focus on health care will be a key part of his strategy in the coming months.
/jlne.ws/2OmPNyj

Tribeca Trade Group’s SolarEdge Options Strategy
Bloomberg (VIDEO)
In this edition of “Options Insight,” Tribeca Trade Group’s Christian Fromhertz discusses the recent volatility in U.S. markets and his options strategy for SolarEdge Technologies Inc. with Bloomberg’s Luke Kawa on “Bloomberg Markets: The Close.”
/jlne.ws/31Iizxk

Education

OIC Educational Series: Options Pricing
The Options Industry Council (OIC)
Throughout the fourth quarter of 2019, The Options Industry Council is pleased to be presenting investors with an entirely new theme to enjoy in our year-long Educational Series. Next up: Options Pricing. From moneyness and pricing models to time decay and volatility skew, we’ll cover a lot of ground in what’s going to be a packed three months.
Throughout the fourth quarter of 2019, The Options Industry Council is pleased to be presenting investors with an entirely new theme to enjoy in our year-long Educational Series. Next up: Options Pricing. From moneyness and pricing models to time decay and volatility skew, we’ll cover a lot of ground in what’s going to be a packed three months.
/jlne.ws/2ViRFK3

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