Mike du Plessis, Trading Technologies and Anonymous
Observations & Insight
Tom Ascher – Open Outcry Traders History Project – Part Two
In Part Two of the JLN interview with Tom Ascher for the Open Outcry Traders History Project, Ascher talks about getting involved in exchange politics. He joined CBOE’s board and later became its vice chairman. At one point, his non-trading activities became his main focus.
Options on Coinbase Global start trading in robust volume
Saqib Ahmed – Reuters
Options on Coinbase Global Inc (COIN.O) started trading in healthy volume Tuesday, less than a week after the U.S. cryptocurrency exchange’s closely watched market debut on Nasdaq.
Monthly options contracts on Coinbase shares started trading for the first time on all U.S. options exchanges, including ones run by Cboe Global Markets (CBOE.Z), the Nasdaq (NDAQ.O) and the Intercontinental Exchange (ICE.N), on Tuesday.
US stocks slump as global COVID-19 cases increase
Carla Mozée – Markets Insider
Stocks moved lower on Tuesday, edging further from their strongest levels on record over concerns about rising COVID-19 cases worldwide.
The S&P 500 and the Dow Jones industrial average were in the red for the second straight session after notching record closing highs at the end of last week.
But on the rise was the VIX, Wall Street’s so-called fear gauge. It climbed by the most in three weeks, indicating that investors expect increased volatility over the next 30 days. A recent survey by Allianz found that many Americans want to stay on the sidelines of the stock market this year, worried that volatility will accelerate and hurt their investments.
Dollar Bears Get New Lease of Life as Yields Hobble Currency
Susanne Barton – Bloomberg
Dollar bears are making a comeback as falling Treasury yields handcuff the reserve currency. Technical indicators suggest the decline may extend.
The Bloomberg Dollar Spot Index climbed 0.1% Tuesday after falling for the previous six sessions in its longest losing streak since June. The index was pressured lower after Treasury 10-year yields dropped almost 15 basis points since the end of March. Leveraged traders have slashed bullish positions, according to the latest data from Commodity Futures Trading Commission.
Oil Traders Buying Back Into Market’s Bullish Summer Outlook
Alex Longley – Bloomberg
Signs of oil market strength are creeping back as traders gear up for an expected rebound in consumption over the summer and supplies shrink in the North Sea.
Some of the market’s more esoteric gauges have surged in recent days, buoyed in part by a barrage of strong consumption data in the U.S. as well as some of the heaviest maintenance in years at fields pumping benchmark North Sea supplies. There’s also been a supply outage in Libya.
Inside Volatility Trading: The Chicken or the Egg?
Kevin Davitt – Cboe
The “Chicken-and-Egg” metaphor is an elegant inquiry into cause and effect. Humans have evolved and occupy a dominant place in the biological ecosystem, largely from their ability to cooperate as well as discern and manage relationships. Potential threats to well-being typically caught the attention of those that understood the correlation between (for example) large animals stirring in ancient Mesopotamia and the prospect of being attacked. The cause and effects were clear. Survival was and is paramount. Action. Reaction.
Exchanges and Clearing
Nasdaq to list options for Coinbase stock
Yogita Khatri – The Block
Exchange giant Nasdaq is set to list options contracts for Coinbase stock. The listing will take place on Tuesday, a Nasdaq representative told Reuters on Monday. Stock options give traders the right, but not the obligation, to buy or sell a stock at an agreed-upon price and date. There are two types of options: puts, which is a bet that a stock will fall, and calls, which is a bet that a stock will rise. Options trading has exploded in recent months, reportedly thanks to the coronavirus pandemic and commission-free trading offered by popular mobile investing apps like Robinhood.
OCC Announces Clearing Fee Reduction to Two Cents Effective June 2021
As part of its continued commitment to deliver operational excellence to the users of the U.S. equity derivatives markets, OCC, the world’s largest equity derivatives clearing organization, today announced a reduction in clearing fees from four and a half cents ($0.045) per contract to two cents ($0.02) per contract effective June 1, 2021, subject to regulatory review.
New micro futures from Eurex – a cost-efficient way to access European markets
In response to increasing interests from market participants for smaller-sized futures contracts, Eurex has launched a new micro product suite – Micro-DAX, Micro-EURO STOXX 50 and Micro-SMI Futures. The new micro futures have low daily margin rates and are a cost-efficient way for global investors to access the European equity index futures markets. The Eurex micro contracts have a multiplier value of 1 which makes the contract value calculation simpler as it equates to the respective product index price. In comparison to the regular futures contracts, Eurex micro contract values are significantly smaller, further reducing potential portfolio tracking errors and providing investors with precise hedging opportunities.
Cboe Expands Product Suite, Geographic Reach
Shanny Basar – Traders Magazine
Cboe Global Markets has expanded its geographical footprint by making an acquisition in Asia Pacific and grown its product suite with the regulatory approval of periodic auctions in the US. In March this year Cboe announced it had agreed to acquire alternative market operator Chi-X Asia Pacific Holding from J.C. Flowers & Co. The acquisition provides Cboe with a point of entry into Australia and Japan. David Howson, EVP, president, Europe and Asia Pacific at Cboe Global Markets, told Markets Media: “The Chi-X Asia-Pacific acquisition fits our global strategy of expanding geographical reach, product mix and asset class diversification.”
Regulation & Enforcement
SEC Charges Binary Options Trading Platform and Two Top Executives with Fraud
On Friday, April 16, 2021, the Securities and Exchange Commission charged Israeli-based Spot Tech House Ltd., formerly known as Spot Option Ltd., and two of its former top executives, Malhaz Pinhas Patarkazishvili (also known as Pini Peter) and Ran Amiran, with deceiving U.S. investors out of more than $100 million through fraudulent and unregistered online sales of risky securities known as binary options.
MIAX expands futures division with new hires from Cboe and Citi; Matt McFarland and Thomas Jarck join Miami International Holdings as part of the expansion of its futures division, MIAX Futures.
Annabel Smith – The Trade
MIAX Futures, the subsidiary of Miami International Holdings (MIH), has hired two executives from Cboe Global Markets and Citigroup as part of its futures division expansion. Matt McFarland joins MIAX as vice president after spending the last 13 years at rival US exchange Cboe Global Markets, most recently as vice president and head of futures for the last two years.
*****JJL: Matt McFarland made a superhero landing.
Chipotle Reports Earnings on Wednesday. How to Play It With Options.
Steven M. Sears – Barron’s
Chipotle Mexican Grill, the purveyor of burritos and stock market momentum, is at a major inflection point ahead of Wednesday’s release of first-quarter earnings. Shares are hovering around $1,550, a level that sparked a 15% decline in early February. Chipotle stock (ticker: CMG) has been gravitating around that upside resistance level for more than a week. Investors are likely waiting to see if earnings will push the stock into a higher trading range and reignite the rally, or if the report marks a sell-the-news moment.
Fundamentals of Futures & Options (also applicable to Series 3 Exam)
For more than 30 years, IFM has consistently provided learners with a solid foundation and understanding of futures and options markets and trading including terminology, risk management, pricing, and basic trade strategies. This instructor-led virtual course includes lectures from an engaging instructor with real-world expertise and supported by class discussion, practice exercises and educational materials. The course fee includes two must-read industry books – “Futures and Options” and the “Guide to U.S. Futures Regulation.”
Dates: May 10, 2021 through May 14, 2021, 12:00 p.m. to 2:00 p.m.
Location: Virtual Live. 2-hour sessions over 5 days.
Instructor: Marti Tirinnanzi
Class size registration is limited to approximately 20 participants to promote student participation and interaction.
The World Federation of Exchanges to Hold 37th Clearing & Derivatives Forum This Week
The World Federation of Exchanges
The World Federation of Exchanges (“The WFE”), the global industry group for CCPs and exchanges, will hold the 37th edition of its Clearing & Derivatives Conference virtually this week. The conference runs April 19 through April 23.
The conference brings together academics, policymakers, regulators, CCPs, derivatives markets and practitioners from around the world to exchange ideas on the opportunities and challenges for the future of central and bilateral clearing in the light of regulatory reforms, market structure changes and technological developments.
Clearing 101: Exchanges, Clearinghouses and CCPs
Dates: Sep. 15, 2021 12:00 p.m. – Sep. 16, 2021 1:30 p.m.
Location Virtual Live. Two 90-sessions over 2 days.
Instructor: Marti Tirinnanzi
Registration is limited to approximately 20 participants to promote student participation and interaction.
Join us for a short program (90 minutes each day for 2 days) that explains the multilateral systems that provide the infrastructure for transferring, clearing and settling payments, derivatives and other financial transactions among financial institutions and end users. Following Dodd Frank, clearinghouses became designated as Systemically Important Financial Market Utilities, vital to the operations of the financial markets and subject to heightened regulatory scrutiny. Buyers and sellers in exchange transactions rely on clearinghouses to intermediate transactions and to manage credit risks between trading parties. As such, clearinghouses promote transparency, efficiency, and stability by providing market-based pricing, daily settlement, and ensuring adequate capitalization for markets to function.
Q1 2021 ETD Volume
May 5, 2021; 10:00 a.m. to 11 a.m. ET
The webinar will highlight the main trends in trading activity in Q1 2021 in the global exchange-traded derivatives markets, with category and regional breakdowns as well as exchange and contract rankings. The webinar also will feature two guest speakers from UBS discussing the rise of retail participation in the U.S. ETD markets.
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 its 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.
The Covered Call Options Strategy
Date: Wednesday, May 12, 2021
Time: 3:30 p.m. CT
Duration: 1 hour
Mark Benzaquen – Principal, Investor Education – OCC
For options investors, the covered call is one of the core strategies for income generation, but there are many details to consider before opening a position. On May 12, join The Options Industry Council’s Mark Benzaquen, a former pit broker who now focuses on options education, for a detailed overview of the covered call.
Oil Marks Anniversary of Crash Below Zero With Rally Above $64
Sharon Cho and Alex Longley – Bloomberg
Demand prospects gain, while Libyan output falls amid dispute; WTI crude futures advance 1.3%; Brent’s prompt spread rallies
Oil jumped above $64 a barrel, a year to the day after futures for the U.S. benchmark collapsed below zero, with the world’s most important commodity extending a powerful rally on bets for better demand.
*****JJL: A year ago WTI traded below zero and opened new risks for derivatives traders to consider. One thing JLN likes to do is create pages in MarketsWiki for significant market days, like WTI going under zero or a stock market crash. I asked JLN editor Thom Thompson, a trained economist, to create a page in MarketsWiki for the WTI under zero day. The result is this page: NYMEX WTI futures trade below zero. He has more to add, but he has made a significant start. Thank you, Thom.