Options Measures Suggest Fervor for Technology Shares May Ebb; Hedge Funds Are Short on Dollar for First Time in Two Years

Aug 17, 2020

Observations & Insight

The Spread: The Futures Of Vol Trading
JohnLothianNews.com

This week on The Spread, Cboe launches Mini VIX Futures while the CME announces a volatility product of its own, the OCC foots the bill, and more.

Watch the video »

Lead Stories

Options Measures Suggest Fervor for Technology Shares May Ebb
Joanna Ossinger – Bloomberg
Options measures that recently were showing extreme optimism about technology stocks are now coming off, a sign to RBC Capital Markets that it might be worth deploying some hedges.
Skew, which measures the cost of bearish options versus bullish ones, had recently gone to lows on stocks like Facebook Inc. and Tesla Inc., showing not only general demand for upside, but strong speculative fervor as investors bet on big further gains. That’s reversing now, according to RBC Capital Markets derivatives strategist Amy Wu Silverman.
/bloom.bg/2CxDiwq

Hedge Funds Are Short on Dollar for First Time in Two Years
Masaki Kondo and David Ramli – Bloomberg
Hedge funds turned bearish on the dollar for the first time since May 2018, an indication that a summer slump in the world’s reserve currency will be prolonged. Net futures and options positions held by leveraged funds against eight other currencies dropped to minus 7,881 contracts last week, according to data aggregated from the Commodity Futures Trading Commission. The swing was driven by growing bullish bets on the euro.
/bloom.bg/3kPwuLX

Funds snatch up CBOT corn despite record U.S. crop forecast
Karen Braun – Reuters
Last week’s government forecast of U.S. corn and soybean crops suggests ample supplies for at least the next year, but speculators were buying Chicago futures late last week as some of those numbers came under scrutiny after severe storm damage.
/reut.rs/2E6WilY

Hedge funds focus on relative value as oil prices stall
John Kemp – Reuters
Hedge funds’ oil trading remained very light last week as the normal summer holiday slowdown was compounded by the lack of clear signals about the future direction of the market.
In the absence of strong signals about the overall direction of prices, some hedge funds and other money managers are turning their attention to relative value plays, betting that oil products will outperform crude.
/bit.ly/3azqja1

Traders Brace for Haywire Markets Around Presidential Election
Gunjan Banerji and Gregory Zuckerman – WSJ
The presidential election is three months away, but some traders are preparing for the possibility that prolonged political uncertainty will stoke stock-market mayhem. The investors are going beyond the normal hedging ahead of a potential change in power in Washington. Instead they are betting on volatility and a possible market tumble later in the year. Among the concerns expressed by some: speculation that President Trump could try to delay the election or disrupt mail-in voting, as well as the chance that a result remains unclear for weeks after polls close.
/on.wsj.com/3g1Ze0A

Exchanges and Clearing

Cboe Global Markets Declares Increased Third-Quarter 2020 Dividend
Cboe (press release)
Cboe Global Markets, Inc. (Cboe: CBOE), one of the world’s largest exchange holding companies, today announced its Board of Directors has declared an increased quarterly cash dividend of $0.42 per share of common stock for the third quarter of 2020, representing a 17 percent increase from the prior quarter’s dividend of $0.36 per share.
/bit.ly/2PZMWLx

Options market operator buys last independent U.S. grain exchange
Julie Ingwersen – Reuters
Options exchange operator Miami International Holdings (MIH) will acquire the 139-year-old Minneapolis Grain Exchange, the last independent U.S. grain exchange, the organizations said in a statement on Friday. Best known for its flagship hard red spring wheat futures contracts, the MGEX, founded as the Minneapolis Chamber of Commerce in 1881, will become a wholly owned subsidiary of MIH, pending approval by MGEX membership and regulators. The deal is expected to close late this year.
/reut.rs/2Fy6q85

MIAX Exchange Group – Options Markets – Closing Time Change on Option Classes XLC and XLRE
MIAX Exchange Group
The MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange effective for Monday, August 17, 2020 will be changing the daily closing times from 4:00 p.m. ET to 4:15 pm ET on the following
Communication Services Select Sector (XLC)
Real Estate Select Sector (XLRE)
/bit.ly/2Ecyhd4

Effective August 17, 2020 through August 21, 2020, MIAX Options and MIAX Emerald 2X Opening and Intraday Valid and Priority Quote Spread Relief in All Symbols
Issue Symbol: All Symbols
Multiplier: 2X
Reason: In maintenance of a fair and orderly market.
Time: Opening and Intraday
Subject Summary: Please be advised, effective August 17, 2020 through August 21, 2020, the MIAX Regulation Department has granted 2 times opening and intraday quote parameter relief for all symbols on MIAX Options and MIAX Emerald.
/bit.ly/2Qdu1x3

MIAX Exchange Group – Options Markets – Corporate Action Alert: Select ProShares ETFs
MIAX Exchange Group
ProShares Ultra QQQ (QLD) and ProShares Ultra S&P 500 (SSO) have announced 2 for 1 stock splits. Associated strike price adjustments will become effective on Tuesday, August 18, 2020. QLD and SSO options will continue to trade without interruption on the MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange.
All GTC orders resting on the MIAX order books in QLD and SSO will be canceled at the close of business on Monday, August 17, 2020.
Additional details about the ProShares stock splits are provided in the attached OCC Memos.
/bit.ly/2Qdu1x3

MIAX Exchange Group – Options Markets – Corporate Action Alert: ProShares Ultra Technology (ROM)
MIAX Exchange Group
ProShares Ultra Technology (ROM) has announced a 4 for 1 stock split. Associated strike price adjustments will become effective on Tuesday, August 18, 2020. ROM options will continue to trade without interruption on the MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange.
All GTC orders resting on the MIAX order books in ROM will be canceled at the close of business on Monday, August 17, 2020.
Additional details about the ProShares Ultra Technology (ROM) stock split are provided in the attached OCC Memos.
/bit.ly/2Qduhw1

MIAX Exchange Group – Options Markets – Corporate Action Alert: Select ProShares ETFs
MIAX Exchange Group
ProShares UltraShort Nasdaq Biotechnology (BIS) and ProShares UltraPro Short QQQ (SQQQ) have announced reverse stock splits effective for Tuesday, August 18, 2020. On that date, the current BIS and SQQQ option classes will change to BIS1 and SQQQ2. The MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange will not list BIS1 and SQQQ2 options. Therefore, no options on BIS and SQQQ will be available for trading on Tuesday, August 18, 2020.
/bit.ly/3248Hzz

Moves

Former CFO at Russell Investments and Janus Capital joins Cboe board of directors; Jennifer McPeek joins the board of directors at Cboe after serving in various senior buy-side executive roles.
Annabel Smith – The Trade
Buy-side industry veteran and the former chief financial officer at Russell Investments and Janus Capital, Jennifer McPeek, is set to join the board of directors of Cboe Global Markets.
/bit.ly/2Y91pZW

TMX Group Names John McKenzie as new Chief Executive Officer
TMX
TMX Group Limited today announced that it has appointed John McKenzie to lead the organization as its Chief Executive Officer (CEO). Mr. McKenzie, who assumes the role effective immediately, also becomes a member of the TMX Group Limited Board of Directors. Mr. McKenzie had served as TMX Group interim CEO since the retirement of former CEO Lou Eccleston in January 2020.
/bit.ly/313NwhJ

Miscellaneous

Inside the 20,000-member trading community started by college students
Ben Winck – Business Insider
Millions of Americans are trading stocks for the first time, hoping to profit from pandemic-fueled volatility and unprecedented government aid.
Vishu Namburi and Ishaan Sandhir started a $300,000-a-year business with that in mind, built on the idea that these Americans needed guidance.
They also plan to resume undergraduate courses at Indiana University’s Kelley School of Business this month.
/bit.ly/2E3DYKJ

Growth for Black professionals has not kept pace with growth of our markets
Douglas E. Harris – FIA.org
What drew you to the derivatives industry? Actually, I was drawn into the industry when I was an associate at Baer Marks & Upham, where I worked for Steve Selig and Marc Buckstein. In 1977, the CFTC mandated a rule review at COMEX, which the firm then represented. The firm tasked me and another associate, Alan Brody, who would go on to become president of COMEX, with reviewing every piece of paper generated by COMEX since its inception in the 1930s to identify any processes, restrictions or requirements that should have been submitted to the CFTC as part of COMEX’s original rule submission to the new agency.
/bit.ly/313iUg2

John Lothian Newsletter

We visit more than 100 websites daily for financial news (Would YOU do that?)

“John Lothian and Company… our industry intelligence.”

Rick Lane

CEO, Trading Technologies

Past Options Newsletters

Pin It on Pinterest

Share This Story