Options Trader Wagers That Meta Shares Will Double Again

Feb 8, 2024

Observations & Insight

Open Outcry Traders History Project Podcast: From Trading Floors to Life’s Crossroads, Tom Gould’s Journey Through Trading and Giving Back
JohnLothianNews.com

In this podcast version of the Open Outcry Traders History Project video interview, Tom Gould reflects on his trading career and the life-changing experience of a heart attack that led him to give back to the community. Gould’s journey began unexpectedly when he took a summer job at the Chicago Board Options Exchange and then after a second summer received a call from his boss with an offer to forego law school and join the Chicago Board Options Exchange (CBOE). His time on the trading floor had been eye-opening, filled with excitement and learning opportunities, so he took the job.

Listen to the podcast »

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Futures Discovery: Regulation & Do You Need to be Registered
JohnLothianNews.com

Today, we’re diving head first into a crucial topic that affects every trader’s journey in the world of futures trading – “Regulation & Do You Need to be Registered.” Buckle up as we unravel the intricate web of rules and regulations that shape the landscape of the futures market.

Watch the video »

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Term of the Week – The Price of an Underlying Asset
JohnLothianNews.com

The basics of how the price of an underlying asset affects options prices.

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Lead Stories

Options Trader Wagers That Meta Shares Will Double Again; Trade rolls June 2025 $600 calls into June 2026 $950 strike; Meta shares doubled twice between November 2022 and now
Carly Wanna – Bloomberg
An options trader appears to be looking to parlay a winning bet on Meta Platforms Inc. into an even bigger windfall if the tech giant doubles – again – in the next 18 months. Early Wednesday, a trader sold a block of 19,000 call options that expire in June 2025 and allow the holder to purchase 1.9 million shares at $600, in exchange for twice as many calls with a $950 strike price expiring a year later, collecting $11.4 million.
/jlne.ws/49jCpla

Quant Hedge Funds Suffer Rare Losses in China Stock Meltdown; China quants lost 7.2% in January, versus gains in 2023; Quants threatened by short-trading curbs, small-cap drop
Bloomberg News
China’s deepening stock-market slump is even taking its toll on quantitative hedge funds, whose computer models have helped them outperform human traders at rival funds for the past three years.
Private quant funds suffered a 7.2% average loss in January, according to Shenzhen PaiPaiWang Investment & Management Co., underperforming the benchmark CSI 300 stock index, which dropped 6.3%. While traditional hedge funds fared even worse, it’s a far cry from quants’ stellar 4.9% gain in 2023, when China’s main equity gauge tumbled.
/jlne.ws/3UFguAq

Quant Hedge Funds Suffer Rare Losses in China Stock Meltdown; China quants lost 7.2% in January, versus gains in 2023; Quants threatened by short-trading curbs, small-cap drop
Bloomberg News
China’s deepening stock-market slump is even taking its toll on quantitative hedge funds, whose computer models have helped them outperform human traders at rival funds for the past three years.
Private quant funds suffered a 7.2% average loss in January, according to Shenzhen PaiPaiWang Investment & Management Co., underperforming the benchmark CSI 300 stock index, which dropped 6.3%. While traditional hedge funds fared even worse, it’s a far cry from quants’ stellar 4.9% gain in 2023, when China’s main equity gauge tumbled.
/jlne.ws/3UFguAq

Bitcoin ETFs Are Changing the Crypto Conversation. An Industry Insider Explains How.
Jack Denton – Barron’s
Shares of the cryptocurrency brokerage Coinbase Global have been on a wild ride. They have lost two-thirds of their value since the company’s initial public offering in April 2021, although the stock price rose nearly 400% last year. While shareholders have been strapped into this roller coaster, Alesia Haas, Coinbase’s chief financial officer, could be thought of as the grim-faced technician on the ground. In reality, she’s quite cheerful.
/jlne.ws/48bj9Ft

The ‘zombie economy’ is haunting the stock market and stoking uncertainty, strategist says
Aruni Soni – Business Insider
The stock market has been jittery lately. Blame zombies.
Or rather, zombie companies, which are debt-saddled firms with unsustainable business models. One strategist says they’ve created a “zombie economy” that’s contributed to volatility as interest rates have risen.
/jlne.ws/497txiJ

A 99% Bond Wipeout Hands Hedge Funds a Harsh Lesson on China; Firms have long been aware of state’s role in restructurings; Yet heavy-handed position in Evergrande caught many off guard
Alice Huang, Dorothy Ma, and Pearl Liu – Bloomberg
From afar, China Evergrande Group had all the makings of a killer distressed-debt trade: $19 billion in defaulted offshore bonds; $242 billion in assets; and a government that appeared determined to prop up the country’s faltering property market. So US and European hedge funds piled into the debt, envisioning big payouts to juice their returns. What they got instead over the course of the next two years is a harsh lesson in the dangers of trying to bargain with the Communist Party. The talks are now dead – a Hong Kong court has ordered Evergrande’s liquidation, and the bonds are nearly worthless, trading in secondary markets at just 1 cent on the dollar.
/jlne.ws/489qQf5

China is facing the US financial crisis ‘on steroids’ as its real-estate market collapses, famed hedge-fund boss says
Filip De Mott – Business Insider
China’s overreliance on real estate has sent its economy tumbling toward what could be a version of the US’s 2008 financial crisis, Kyle Bass said on CNBC on Tuesday. “This is just like the US financial crisis on steroids,” the Hayman Capital founder said. “They have 3 ½ times more banking leverage than we did going into the crisis, and they’ve only been at this banking thing for a couple of decades.” Bass said the years of economic growth China enjoyed prior to the pandemic were made possible by an unregulated real-estate market, which leaned too heavily on debt to expand.
/jlne.ws/3SR9vlN

Citadel Among Hedge Funds That Got Morgan Stanley’s Block-Trading Leaks; CaaS, Evolution also got tips on blocks in bank’s settlement; Citadel and other hedge funds weren’t accused of wrongdoing
Sridhar Natarajan and Katherine Burton – Bloomberg
When the US punished Morgan Stanley for leaking upcoming stock trades to favored clients, it kept the list of recipients secret. They include one of Wall Street’s biggest players: Citadel. A trader at Ken Griffin’s giant hedge fund was among a coterie of executives described anonymously in Morgan Stanley’s settlements with the government, according to people with knowledge of the matter.
/jlne.ws/42yOGj7

Exchanges

NYSE-parent ICE’s profit beats as commodity markets boost trading volumes
Reuters
Intercontinental Exchange beat Wall Street estimates for fourth-quarter profit on Thursday as commodity markets powered growth in trading volumes at the New York Stock Exchange parent. The global commodity and energy markets saw significant volatility last year due to extreme weather conditions in parts of the U.S. and the world over. Meanwhile, the Middle East conflict also led to an increase in oil trading volumes.
/jlne.ws/3UyYZ4X

The electronification of cleared FX
Eurex
With the Eurex Derivatives Forum Frankfurt taking place at the end of this month, we caught up with Shuo Wu, Global Head of Forward e-Trading at Deutsche Bank. We discussed the path forward for cleared FX derivatives, how the industry is overcoming the challenges of migration from OTC and where to expect innovation in the market.
/jlne.ws/49cQ6m3

Deribit launching linear options for SOL, XRP and MATIC
Brian McGleenon – The Block
Cryptocurrency derivatives exchange Deribit has announced that it will be offering linear options for Solana, XRP, and Polygon. “Based on demand from our clients, we chose to expand our offerings with some key altcoins; SOL, MATIC, and XRP,” Deribit Chief Commercial Officer Luuk Strijers said in an email to The Block.
/jlne.ws/3OBzBrj

NYSE US Exchanges To Close In Observance Of Washington’s Birthday
NYSE
In observance of Washington’s Birthday, the New York Stock Exchange, NYSE American Equities, NYSE Arca Equities, NYSE Chicago, NYSE National, NYSE American Options, NYSE Arca Options, and NYSE Bonds markets will be closed on Monday, February 19, 2024.
/jlne.ws/42wc0y8

Trader Alert 24-12: Holiday Reminder – Closed February 19, 2024
MEMX
MEMX Equities and MEMX Options will be closed Monday, February 19, 2024, in observance of the Presidents’ Day holiday. Normal trading will resume on Tuesday, February 20, 2024.
/jlne.ws/3SvPn8n

Regulation & Enforcement

Deutsche Boerse urges swift introduction of EU rules to shift euro clearing from London
Huw Jones – Reuters
Deutsche Boerse Chief Executive Theodor Weimer said on Thursday that he had wanted more from newly-agreed European Union rules aimed at shifting euro derivatives clearing from London to the bloc, but they were still a step in the right direction. EU policymakers reached a provisional deal on the rules on Wednesday, forcing banks and asset managers in the bloc to have an “active account” with an EU-based clearing house for widely-used derivatives such as euro interest rate swaps (IRS).
/jlne.ws/3SOvCKI

Strategy

Two Trading Ideas
Tastylive (Video)
Mike, Nick and Katie take trading questions live on YouTube chat and explain the answers in depth using the tastytrade platform and graphics.
/jlne.ws/3whsf5Y

VIX Futures Curve
Cboe (Video)
Scott Bauer @cboesib on strong $SPX performance, yesterday’s $VIX options volumes (30% above ADV) and the #VIX futures curve in today’s #Vol411.
/jlne.ws/3OBwL5V

Events

Women In Listed Derivatives (WILD) is offering a Zoom event on February 20 titled, “Show Up, Stand Out, Break Through (Part II): A Founder and CEO’s Authentic Leadership Journey,” with speaker Odessa Jenkins, the CEO of Bonfire and founder of the Women’s National Football Conference. This is the follow-up to Jenkins’ first session with WILD on January 9, which prompted so many questions it “sparked the need for more time to learn about Jenkins’ advancements, and … even more time for Q&A.” Registration is available here, and for those who missed Part 1, the video is available here.~SR

The Eurex Derivatives Forum Frankfurt takes place February 28-29, 2024. This is a leading European event focused on trading and clearing for derivatives across asset classes. Participants can join the forum either in Frankfurt or by viewing selected slots on the Eurex virtual platform. Joining online is free. An ESG Innovation Lab workshop will feature moderated roundtable discussions including: How to enrich your client relations by integrating sustainability topics; The linkage of positive contribution and products; Circular Commodity Exchange: New asset classes on the horizon – a Deutsche Boerse Network Initiative. Learn more and register here. ~SAED
X~/MULTILINE

Miscellaneous

Is it possible to master emotions when trading?
Moira O’Neill – Financial Times
The chances are that someone you know is still trying their hand at day trading. It might be you. But even companies whose business it is to promote day trading are now warning that you are likely to lose money unless you can rein in your emotions.
Which allows me to use the most brilliant FT Money reader comment ever written: “I lost most of our money backing internet stocks 20-odd years ago, the children were young (and at private schools — ouch). When l told my wife, she asked if I’d lost the house (which we owned outright). l said, no, even l was not that stupid. She then laughed and said that it ‘doesn’t really matter much then’. I realised at that moment she was the best investment l was ever going to make and that was a totally emotional choice.”
/jlne.ws/42ud6KR

The Hedge Funds That Changed the Game

The Hedge Funds That Changed the Game

First Read Hits & Takes John Lothian & JLN Staff The second story in the Leads section from Bloomberg is titled "Why Making Computer Chips Has Become a New Global Arms Race." The story hit a nerve with me, but misses a key point. While it is very important for...

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The Spread

Yield-Crazed Day Traders Pony Up for ‘169%’ Option-Income ETFs

Observations & Insight From Open Outcry to Electronic Trading: Andy Tan's Journey Through the Evolving World of Finance JohnLothianNews.com Andy Tan was interviewed by Robert Lothian of John Lothian News at the SGX Center in Singapore for the Open Outcry Traders...

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