Options traders are piling into bullish bets on small-cap stocks at a record pace

Nov 16, 2023

Observations & Insight

Market Makers in the Options Industry: Eric Cott, Former Advisor in Education at the OIC, Discusses Market Makers and More in This Options Discovery Full Interview

In this Options Discovery full interview, Asma Awass speaks with Eric Cott, former advisor in education at the OIC and current president of Cott Consulting. Eric addresses a variety of topics from his career including his experiences in the derivatives space as well as how he started his own company. Eric also gives insight into how liquidity, market volatility, and technology. affect the role of market makers in the options industry.

Watch the video »

Lead Stories

Options traders are piling into bullish bets on small-cap stocks at a record pace
Joseph Adinolfi – MarketWatch
Options traders piled into bullish bets on the Russell 2000 on Tuesday, after the October consumer-price-index report sent the battered small-cap index surging to its best day in more than a year.
A team of options strategists at Goldman Sachs Group said that 1.44 million call options tied to an exchange-traded fund tracking the Russell 2000 RUT changed hands as small caps rocketed higher and traders chased gains.

Korea Mulls Years-Long Trading Ban on Illegal Short Sellers
Youkyung Lee – Bloomberg
South Korea is considering several options to penalize illegal short sellers, including banning them from stock trading for up to 10 years, the country’s financial regulators said. Those who engage in illegal short selling – such as placing “naked short” orders – may also be restricted from serving as executives at listed companies and financial firms in Korea, the Financial Supervisory Service said Thursday. The government may also extend a ban on all short selling beyond June next year if reform measures aren’t sufficient, the Financial Services Commission said.

Global banks criticise South Korean short selling ban as ‘phantom farce’; Regulators seen to be appeasing retail investors ahead of parliamentary elections next year
Christian Davies and Song Jung-a and Hudson Lockett – Financial Times
Global investment banks have criticised a blanket ban on short selling imposed by South Korean regulators last week, accusing authorities of bowing to the demands of local retail investors ahead of parliamentary elections in April. The ban, which came into force on November 6 and is due to last until June next year, was introduced as a response to so-called naked short selling, which financial authorities said had “undermined fair price formation” in South Korea’s capital markets.

Hedge fund Schonfeld to cut 15% of jobs after ending Millennium talks; Multi-manager tells 150 employees, mostly in non-investment roles, they are losing their jobs
Harriet Agnew – Financial Times
US hedge fund Schonfeld Strategic Advisors is cutting 15 per cent of its workforce in a cost-cutting drive after walking away from talks with larger rival Millennium Management earlier this week. About 150 of the firm’s 1,000 employees were informed on Wednesday that they were losing their jobs, according to a person with direct knowledge of the situation. The cuts largely relate to non-investment roles in areas such as technology and back-office services, the person added.

Regulation & Enforcement

SEC Defers Decisions on Spot Bitcoin ETF, Grayscale Ether Futures Filings
Emily Graffeo – Bloomberg
The US Securities and Exchange Commission yet again has deferred making a decision on whether to approve the first US exchange-traded fund that invests directly in Bitcoin, despite speculation building that approval is just around the corner.
The primary US securities regulator deferred on a filing from Hashdex to convert its existing Bitcoin futures ETF into a spot fund, according to a document posted on its website Wednesday.


January Calls
Cboe (Video)
In #Vol411, Scott Bauer @cboesib covers increased volumes in $VIX options, active #VIX options strikes/expiries and the state of its futures term structure given recent market action.


Don’t be fooled: Huge one-day stock rallies are more common in bear markets
Mark Hulbert – MarketWatch
Bullish stock investors should temper the enthusiasm with which they greeted the stock market’s explosive rally in the wake of this month’s better-than-expected report on inflation.
That’s because huge rallies are more likely to occur during bear markets rather than in major uptrends.

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