Record Wall Street rally triggers boom in options; Mania has taken hold in the equity market and there is “no respect” for risk, says one strategist

Feb 19, 2020

Lead Stories

Record Wall Street rally triggers boom in options
Jennifer Ablan – Financial Times
While the S&P 500, Dow and Nasdaq have surged to record highs in recent weeks, another rally has taken hold. The US options market has been experiencing a huge jump in trading — led by large-capitalisation companies including Tesla, Amazon, Apple, Google, Microsoft and Disney, according to analysts at Goldman Sachs.

Mania has taken hold in the equity market and there is “no respect” for risk, says one strategist
Steve Goldstein – MarketWatch
Veggie-foods maker Beyond Meat trades at 282 times estimated earnings. Tesla’s stock price has doubled this year. Virgin Galactic’s stock price has nearly tripled in 2020.
The world’s most profitable company, Apple, withdraws its revenue guidance, and the technology-heavy Nasdaq Composite actually closes higher on the day.

The Market’s Real Worry Is Lack of Worry
Jon Sindreu – WSJ
The stock market’s coronavirus wobbles may be overdone given the robustness of the U.S. economy, so it is tempting to say that “the only thing to fear is fear itself.” What should be concerning, though, is that there is little of it.
On Tuesday, February’s survey of global fund managers conducted between Feb. 6 and 11 by Bank of America Merrill Lynch showed that cash now makes up only 4% of portfolios, the lowest since March 2013. Little “cash on the sidelines” is often a sign of investor confidence.

Exchanges and Clearing

Phase 4 – Exercise & Assignment (E/A) Changes – 3/9/20
CME Group
Phase 4 of the changes to the Exercise and Assignment (E/A) cycle and processing and deadlines to deliver results earlier, for the NYMEX Late Coal and Power Options is scheduled for Monday, March 9, 2020. The first early Expiration in NYMEX Late Power and Coal will be Friday, March 27, 2020

Performance Bond Requirements
CME Group
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed below.

Regulation & Enforcement

SR-NASDAQ-2020-006 Notice & Approval
Removal of Listing Rule and other Amendments.


Capitalead Pte. Ltd. Expands Access to Derivatives Markets With Vela’s DMA Platform
BusinessWire (press release)
Vela, a leading independent provider of trading and market access technology for global multi-asset electronic trading, today announced that Capitalead, a proprietary trading firm, has expanded its use of Vela’s award-winning DMA Platform to access global futures and options markets.

Options Technical Update #2020 – 3 Nasdaq Options Markets Update SQF and QUO Technical Specifications in Support of CAT
Nasdaq has updated the Quote Using Orders (QUO) technical specifications for The Nasdaq Options Market (NOM), and the Specialized Quote Feed (SQF) technical specifications for all 6 Nasdaq option markets, to support changes required for the Consolidated Audit Trail (CAT) reporting.


Options markets flash euro warnings after currency plunges past $1.08
Richard Pace and Sujata Rao – Reuters via Nasdaq
The euro’s tumble below $1.08 for the first time in three years may be only the first milestone in its downward journey, with global newsflow, economic data and option market positioning all seemingly stacked against the single currency. Euro-dollar, the world’s most traded exchange rate, has weakened around 3.5% this year, the latest lurch coming on Tuesday when a dismal German investor sentiment survey and a forecast-beating U.S. manufacturing gauge highlighted the two economies’ diverging fortunes.


Cboe Global Markets to Present at the Citi Conference on Tuesday, February 25
Cboe (press release)
Cboe Global Markets, Inc. (Cboe: CBOE), one of the world’s largest exchange holding companies, announced today that Brian Schell, Executive Vice President, Chief Financial Officer and Treasurer will present at the Citi Asset Managers, Broker Dealers and Exchanges Conference on Tuesday, February 25, at 9:30 a.m. (Eastern Time).

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