Rocket shares soar more than 70% as analysts eye ‘GameStop-esque’ short squeeze; Rocket Falls as RBC Suggests Reddit-Driven Rally Is Overdone

Mar 3, 2021

$29,926/$300,000 (10.0%)
Wendy Chan

Lead Stories

Rocket shares soar more than 70% as analysts eye ‘GameStop-esque’ short squeeze
Sinéad Carew – Reuters
Heavily shorted mortgage provider Rocket Companies saw its stock surge on Tuesday, in an eye-popping move reminiscent of the rallies that powered GameStop GME.N and other so-called meme stocks earlier in the year.
Shares of Rocket, the parent company of Quicken Loans, closed up 71.2% at $41.60 after being halted several times for volatility. More than 367 million shares changed hands in the stock’s busiest trading day ever.
/jlne.ws/2Oh4Onu

*****JB: Also see The Wall Street Journal story, Rocket Stock Is the New Meme Trade. Move Over, GameStop.

Rocket Falls as RBC Suggests Reddit-Driven Rally Is Overdone
Paul Jarvis, Suzannah Cavanaugh, and Felice Maranz – Bloomberg
Rocket Cos. fell Wednesday, halting a three-day rally driven by sentiment that the home-loan provider was the latest retail-trader favorite for its high short interest. The stock fell as much as 30%, its steepest decline ever, after RBC Capital Markets downgraded its recommendation to sector perform from outperform, with a price target that suggests a 28% drop from Tuesday’s close. While mortgage demand is expected to continue to boost growth, that is now more than being captured in Rocket’s current valuation, analyst Daniel Perlin said in his report.
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Future Returns: Wall Street Aims to Tame Volatility With New Products
Karen Hube – Barron’s
Wall Street is notorious for conjuring up new products to appeal to investor sentiment, and its creative minds have done it again. A number of products that promise stock market returns and downside protection have hit the market in recent years to appeal to nervous investors.
With expectations of a high volatility year ahead in stocks, this new universe of products, marketed by exchange-traded funds (ETF) and annuity companies, may have heightened appeal. In the ETF world, they’re called defined-outcome or buffer ETFs. The annuities are referred to as registered index-linked annuities (RILAs).
/jlne.ws/3bdXaTX

How the Oil Market Bounced Back From a Year of Crisis
Joe Wallace – WSJ
Oil prices have staged a rapid recovery since the biggest crisis to strike the energy industry in decades.
The Organization of the Petroleum Exporting Countries and its allies stepped in last spring to backstop the market by slashing production in the teeth of a collapse in crude prices. This week, the cartel is expected to reach a deal on unwinding some of those cuts.
Here is why U.S. crude prices have roared back above $60 a barrel from a low of minus $37.63 a barrel last April.
/jlne.ws/3kT0U0x

Exchanges and Clearing

OCC Monthly Volume by Exchange – February 2021

Pandemic sees electronic fixed income trading skyrocket in 2021; Research by Greenwich Associates estimated that the average daily e-trading volume reached a new record of $10.6 billion in January earlier this year.
Annabel Smith – The Trade
Remote working conditions and volatility caused by the pandemic have caused electronic trading volumes to skyrocket in 2021, according to a report by Greenwich Associates. The statistics from Greenwich confirmed that the average daily volume for fixed income electronic trading had reached a new record of $10.6 billion in January earlier this year.
/jlne.ws/3uT3MPA

MGEX Reports the Fifth-Best Month in its History
MGEX
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), completed February 2021 with a total of 289,812 contracts traded, making it the fifth-best overall month in the history of the Exchange. Compared to February 2020, this past month saw an 11% increase in total volume. Additionally, this past month’s record numbers made it the best February in MGEX’s history.
/jlne.ws/302krBY

Regulation & Enforcement

Gensler Targets Broker ‘Gamification’ After Trading Tumult
Benjamin Bain and Robert Schmidt – Bloomberg
Biden’s SEC pick also pledges to review payment for order flow; Recent market volatility will continue to be a focus for SEC
Gary Gensler pledged to scrutinize trading apps that have exploded in popularity, signaling the Biden administration’s pick to lead the U.S. Securities and Exchange Commission plans to confront issues central to wild stock swings that have shocked Wall Street and Capitol Hill.
/jlne.ws/3bXH7sz

SEC chair nominee says he will evaluate payment for order flow practice at the heart of the GameStop saga
Carla Mozée – Markets Insider
Gary Gensler, the nominee to be the next head of the Securities and Exchange Commission said the agency under his watch would review issues surrounding protection and fairness for retail investors.
There’s been a “gamification” in trading for retail investors, and in recent months there has been “unprecedented volatility” in many stocks. This has been seen most notably in video-game retailer GameStop, said Senator Sherrod Brown of Ohio, the ranking member of the Senate Banking Committee during a virtual confirmation hearing on Tuesday.
/jlne.ws/2MHniwX

Technology

Orient Futures Singapore and Trading Technologies Contract to Provide Connectivity to Chinese Derivatives Markets via the TT Platform
Trading Technologies International, Inc.
Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, infrastructure and data solutions, and Orient Futures International (Singapore) Pte. Ltd. (Orient Futures Singapore) a world-class broker based in Singapore, today announced they have contracted to deliver connectivity to the Chinese international derivatives markets through the TT platform.
/jlne.ws/3uKqedz

Strategy

When Will the Steepening Stop?
Frank Kaberna – tastytrade
While “The Steepening” may sound like a Hollywood-produced thriller wherein an animated monster made of tea leaves terrorizes some unassuming small town, it’s in fact the increase in the spread between short-term and long-term interest rates. This form of steepening, however, can be a beast in its own right: the gap between 2YR and 10YR US Treasury rates has gone from below 0.80% at the start of December to above 1.3% last week (its highest value since 2015).*
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Events

Registration is open! – FIA Boca 2021
FIA.org
/bit.ly/3qADb6G

A New Virtual Experience
OIC
The Options Industry Conference is Going Virtual in 2021. Join OCC and the options exchanges for the 39th annual Options Industry Conference, April 28-29, 2021. While the conference will be held virtually for the first time in history, the focus will continue to be the key topics facing the options industry today, from the regulatory shifts in the U.S. and Europe to the technological developments that are driving monumental change in markets around the globe.
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Miscellaneous

Asset Class Scoreboard: February 2021
RCM Alternatives blog
Last year it feels like all we talked about was the rough performance of commodities and now we’re reading headline after headline of a 2021 commodity supercycle “driven by stimulus spending and a weaker US dollar” (SP Global). Up 15% for the year already, I think we’ll be talking about commodity performance for a good portion of 2021. As for the rest of the chart, Managed Futures are holding down second place with a good start to the year in a great turnaround from the first month of 2021, and bonds will most likely be facing a stormy few months with low performance, low volatility, and low rates.
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(Podcast) OIR Interviews: Entering The Free Broker Battlefield with Gatsby
Options Insider Radio Network
On this episode Mark is joined by:
Ryan Belanger-Saleh, Co-ceo, Gatsby Digital, Inc.
Mark and Ryan discuss: what the heck is Gatsby?; launching a new brokerage firm during the busiest year in options history, have we made options trading too easy?; does Gatbsy plan to stop taking PFOF?; are we on the cusp of a mini/micro/fractional options revolution?; and much more…
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Past Options Newsletters

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