Record Call Surge Aiding the S&P 500 Is a Historically Bullish Signal; Gold ‘Getting Hit From All Directions’ as Investors Flee Funds; U.S., European stocks rise along with U.S. Treasury yields

Dec 9, 2016

Observations & Insight

JLN Options To Have Guest Editor: The Schwartz Will Be With Us
As much as I’m sure you all love the JLN team’s snark and irreverence, sometimes we shake things up. As such, next week we will have a guest editor: Trade Alert’s Henry Schwartz. Schwartz will providing his insight and commentary for JLN Options.

Enjoy the different spin next week!

Lead Stories

Record Call Surge Aiding the S&P 500 Is a Historically Bullish Signal
Joseph Ciolli and Dani Burger – Bloomberg
Call volume on S&P 500 contracts reached 900,000 on Wednesday; Options measure has reached just 10 records since August 2005
The S&P 500 Index’s climb to a record high was aided by historically strong support from bullish options traders.

Gold ‘Getting Hit From All Directions’ as Investors Flee Funds
Eddie Van Der Walt and Susanne Barton – Bloomberg
Everything’s against gold at the moment.
Gold futures are heading for a fifth consecutive weekly loss, the longest run since November 2015, as the Federal Reserve gears up to raise rates, while U.S. equities at record levels lure money out of havens and fund holdings wither. Assets in bullion-backed exchange-traded funds contracted for a 20th straight day as of Thursday, the longest stretch since May 2013.

U.S., European stocks rise along with U.S. Treasury yields
Sinead Carew – Reuters
U.S stocks followed Europe higher on Friday while the euro weakened against the dollar after the European Central Bank’s Thursday decision to extend its stimulus program.
U.S. Treasury yields climbed with benchmark yields on track for a fifth straight week of increases following stronger-than-forecast Chinese inflation data and ahead of $56 billion of coupon-bearing government bond supply next week.

OPEC’s Historic Deal Won’t Be Enough to Drain Oil Stockpiles
Javier Blas and Angelina Rascouet – Bloomberg
OPEC is likely to bring the oil market into balance by the middle of next year, but its production cut looks set to fall short of its stated goal of draining the stockpiles that are depressing prices.

Wall Street’s Old, Unwanted Bond Salesmen Find a Home in Chicago
Hugh Son – Bloomberg
Arthur Main learned the hard way that Wall Street is a young person’s game.
After a quarter-century at Morgan Stanley, Main — like countless old-school types who came of age in the ’80s — was kicked to the curb as banks turn to youth and technology in the face of tighter regulation and lower profits.

CDAC to launch options trading this fiscal, meeting underway
The commodity derivatives advisory committee (CDAC) appointed by the market regulator Securities Exchange Board of India (SEBI) is meeting this month to firm up and shape regulations around options trading in commodity markets. The Sebi in-principle nod is already in place.


CME Group Announces New Senior Management Positions
Press Release
CME Group today announced that it has appointed Julie Winkler and Kim Taylor to new roles on its management team.
Winkler, a 20-year veteran of CME Group, will serve as the company’s Chief Commercial Officer, overseeing sales, product marketing, research and data analysis functions as well as the company’s innovation lab. Winkler will report to CME Group Chairman & Chief Executive Officer Terry Duffy. She fills the position formerly held by Bryan Durkin, who assumed the role of President last month.
Taylor, who has worked at CME Group for nearly 30 years, will serve in a newly created role as President, Clearing and Post-Trade Services, with responsibility for the company’s clearing house, post-trade and digitization businesses, also reporting to Duffy.

The Bats ETF Marketplace Welcomes New Issue
from Exchange Traded Concepts
22 Issuers, 113 Funds Now Listed on Bats in the U.S.
Bats Press Release
Bats Global Markets, Inc. (Bats: BATS), the #1 U.S. market for exchange-traded fund (ETF) trading, today welcomed another fund from Exchange Traded Concepts (ETC) to the Bats ETF Marketplace.

Regulation & Enforcement

S.E.C.’s Top Enforcer to Depart at Year-End
Michael J. de la Merced – NY Times
The ranks of Wall Street’s regulators in Washington are continuing to turn over, as the Securities and Exchange Commission’s top enforcer announced plans to leave.
Andrew J. Ceresney, the director of the S.E.C.’s enforcement division, said on Thursday that he planned to depart the regulator by year-end after three years at the commission.

Chinese financial regulator defends futures markets
Futures & Options World
Trading in China’s futures market has had no bearing on price volatility in the underlying Chinese spot market, according to that market’s main financial regulator.


Bloomberg terminal outage
Reuters via Business Insider
Users of Bloomberg LP’s terminals are experiencing slowness, a company spokesman confirmed on Thursday after complaints about outages on the terminals started hitting Twitter shortly before noon.


Block Trade Analysis – Buyer of 250,000 XLF Jan 20th 25 Calls
Russell Rhoads – CBOE Options Hub
All of equity market sectors the financial sector seems to have benefited the most since Donald Trump was elected President back on November 8th. Note on the price chart below that as of mid-day today the Financial Select Sector SPDR Fund (XLF) is up about 19% since election day.

Goldman Sachs: Bet on the 2016 laggards to soar in 2017
Rebecca Ungarino – CNBC
Investors should bet on the 2016 laggards, Goldman Sachs’ options research team says, noting that stocks that have underperformed the S&P 500 in 17 of the last 25 years have ended up as leaders the following year.


How options can help stock positions
Gary Delany – TradingFloor
There is a tendency to see investment tools in isolation. Securities. Fixed income. Commodities. Foreign Exchange. Some people even see derivative instruments as separate tools. There is a strong case to be made, however, that options are complementary to an underlying asset position.
In a nutshell, options can help change a risk profile. They can help enhance returns, protect against a downwards move, or give increased (or decreased) exposure to a specific group of stocks.

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