Risk Is Likely to Make a Comeback. Here’s What to Expect.
Steven M. Sears – Barron’s
As we look to 2022, investors should prepare for potentially dramatic changes that might not be appreciated.
For more than 20 years, investors have relied on the mighty “Fed put”—that is, the Federal Reserve easing monetary policy whenever the stock market suffers significant losses or the economy was threatened. This has been true since the 9/11 terrorist attacks in 2001, the 2007-09 financial crisis, and the Covid-19 pandemic that began in 2020 and has yet to end.
US stock market advance masks treacherous undercurrents
Eric Platt – Financial Times
US stock markets are once again sailing to record peaks, yet under the surface, a strong tide is pulling down the share prices of hundreds of companies to their lowest levels of the past 12 months.
The rising divergence in the performance of individual shares hints at a fierce rotation, supercharged by booming options trading and a hawkish pivot by the Federal Reserve that could upset many investors’ positions.
Tech Traders Unwind Hedges and Get Back to Pummeling Risky Names
Lu Wang and Vildana Hajric – Bloomberg
Nasdaq 100 tumbles 2.6% as Fed’s signaled rate hikes sink in; Comes one day before ‘triple witching’ options expirations
The hazard of getting wedded to knee-jerk reactions following Federal Reserve news was on display again Thursday, as a two-week bout of turbulence in speculative companies resumed on the eve of a giant options expiration.
Financial stability risks are ‘elevated’ as climate, COVID and crypto dangers rise, U.S. says
Chris Matthews – MarketWatch
The Financial Stability Oversight Council said that risks to U.S. financial stability are higher today than before the pandemic, as rising debt levels, climate risks and the ongoing uncertainty related to the COVID-19 pandemic pose threats to the global financial system.
“The outlook for global growth is characterized by elevated uncertainty, with the potential for continued volatility and unevenness of growth across countries and sectors,” the council said in its annual report to Congress, issued Friday.
Inside Volatility Trading: Innovation and Visibility in Capital Markets
Kevin Davitt – Cboe
Visibility is not something I consider often, but I am bound by gravitational forces. In aviation, visibility is a measure of the distance at which an object or light can be clearly discerned. Take off and initial climb as well as approach and landing for aircraft are directly impacted by visibility.
In capital markets, visibility is also paramount. Markets look forward and the degree to which the future appears clear impacts the willingness of market participants to remain “in flight” (invested). When visibility becomes limited, some market participants look for the nearest spot to land. In other words, they reduce exposure.
Data spotlight – Growing number of regulated markets for crypto derivatives; CME is the clear leader for now but faces new challengers
Jeff Reeves and Will Acworth – FIA MarketVoice
Since 2018, CME Group has been the leader in offering a fully regulated marketplace for bitcoin futures. Its dominant position is now being challenged, however, with two large market operators stepping into the space through acquisitions. As a result, fund managers and other institutional investors who want exposure to crypto currencies—but only in a regulated environment—now have a growing range of choices.
2022 Outlook: Global Exchanges
Economic recovery and central-bank actions coinciding with new virus concerns are boosting volatility into 2022 for interest rates and commodities, while equities activity may face challenging 1Q comparisons. Trading could help support modest revenue growth at global exchanges in 2022. Diversification might remain focused on bolt-on M&A outside of Europe, while Deutsche Boerse may need a larger deal. Data and analytics remain structural themes, while Asia listings, market structure debates (including payment for order flow), and existing and future MiFID rules will be key to watch. Fixed income, index, crypto assets, ESG and options development may boost product growth.
Position and Exercise Limit Increases for Options on Exchange-Traded Funds LQD and GDX
MIAX Trading Alert
MIAX Options, MIAX Pearl, and MIAX Emerald provisions regarding position and exercise limits for options on the following exchange-traded funds (“ETFs”) were recently amended as follows:
iShares iBoxx $ Investment Grade Corporate Bond ETF (“LQD”) Prior Limit 250,000 contracts, New Limit 500,000 contracts
VanEck Vectors Gold Miners ETF (“GDX”) Prior Limit 250,000 contracts, New Limit 500,000 contracts
Regulation & Enforcement
Don’t cut off euro clearing in London for now, says EU watchdog
Huw Jones – Reuters
London’s two big derivatives clearing houses should not be cut off from customers in the European Union until there are incentives to shift business to the bloc such as capital charges, the EU’s securities watchdog said on Friday.
FIA statement on the confirmation of Russ Behnam
Washington, DC—FIA President and CEO Walt Lukken made the following statement on the US Senate confirmation of Rostin (Russ) Behnam to serve as chairman of the Commodity Futures Trading Commission (CFTC):
“FIA congratulates Russ Behnam on his confirmation to chair the CFTC. Chairman Behnam brings a depth of experience to the office that will serve the public well. He has been a principled advocate for safe, open and transparent markets, and FIA looks forward to working with Chairman Behnam and the Commission on the important issues facing our industry.”
SEC delays decisions on Bitwise and Grayscale’s Bitcoin ETFs
The SEC now expects to decide whether to approve or disapprove Bitwise and Grayscale’s Bitcoin exchange-traded offerings in early February.
The United States Securities and Exchange Commission continues to delay decisions on Bitcoin (BTC) exchange-traded funds (ETF), issuing two fresh deadline extension notices.
On Wednesday, the SEC postponed two major Bitcoin exchange-traded offering proposals, including NYSE Arca’s “actual” Bitcoin ETF, named Bitwise Bitcoin ETP Trust, and Grayscale Bitcoin Trust’s Bitcoin ETF.
US Stock Market Outlook 2022: Bank of America Is Bearish
Thyagaraju Adinarayan – Bloomberg
The old stock market adage of “buy the first hike, sell the penultimate rate hike” could go wrong this time as inflation is out of control, according to Bank of America Corp.
“Little cracks” were appearing in megacap tech stocks, the epicenter of a 13-year bull market, before tightening even began, BofA’s Chief Investment Strategist Michael Hartnett wrote in a note. He remains bearish until investor positioning “shows full-blown capitulation” or a credit event on Wall Street causes central banks to announce a reversal of tightening.
Crypto derivatives can foresee price action but need institutional buzz to truly shine
The crypto derivatives market plays an important role in price discovery, but institutional investors are needed to add depth.
The cryptocurrency market has been under a period of duress, with a majority of the tokens in the cryptoverse witnessing a price slump that has set in since the first week of December. The flagship cryptocurrency token, Bitcoin (BTC), underwent a flash crash on Dec. 4, wherein the price of the token fell below $50,000 in nearly two months, as per data from Cointelegraph Markets Pro.
FIS Cleared Derivatives Suite Named Post-Trade System of the Year by FOW
FIS press release via Businesswire
FIS won first place for the FIS Cleared Derivatives Suite at the FOW International Awards 2021.
The FOW awards recognizes excellence and achievements in the derivatives industry.
Financial technology leader FIS (NYSE: FIS) today announced that it has won Post-Trade System of the Year at the FOW International Awards 2021 for the FIS Cleared Derivatives Suite. FIS received the award at FOW’s (Futures & Options World) ceremony earlier this month.
2021 in Data: The Year of Covid Vaccines, Meme Stocks and Climate Crises
The year 2021 held great promise—for starters, it meant 2020 had finally ended. But dreams of a return to normalcy were quickly dashed by U.S. Capitol riots that threw into question the very survival of American democracy, supply chain issues that snarled global commerce, an uneven rollout of Covid vaccines and new waves of infections, deadly wildfires and extreme market volatility driven by Redditors pushing meme stocks.
Here’s how we told some of 2021’s most important stories with charts, maps and visuals.
Barron’s Delved Into the World of Meme-Stock Trading. Here’s What We Learned.
Carleton English – Barron’s
Over the past two months, I’ve tried my hand at meme-stock trading and got many unexpected lessons along the way.
I went into this experiment knowing full well that I was engaging in something slightly out of my control. I bought two stocks—Cleveland-Cliffs (ticker: CLF) and SmileDirectClub (SDC)—that were popular on WallStreetBets, the Reddit forum at the center of the meme stock frenzy. I even bought a call option on Bed Bath & Beyond (BBBY).
OB 1055: The Death of VIX was Greatly Exaggerated
Host: Mark Longo, The Options Insider Media Group
Co-host: Andrew Giovinazzi, The Option Pit
Co-host: Mike Tosaw, St. Charles Wealth Management
In This Episode Mark, The Rock Lobster, And Uncle Mike Break Down:
Markets Mixed To End The Week
Most Active Equity Options Today Including Aapl
Earnings Volatility In Adbe, Fdx, Rivn, Rad, Nke
Unusual Options Activity In Teck, Wen, Aes
Whether Rho Will Be A Factor In 2022
Meme Stocks And Types Of Spreads Used At The End Of The Day
And Much More…