SEC options probe reports rock GameStop stock after Roaring Kitty returns

Jun 5, 2024

Observations & Insight

One of the results of the pivot of Cboe in closing down Cboe Digital was losing several talented executives. One of them is John Palmer, who was president of Cboe Digital, and today he was announced as part of the leadership team at IEX. Congratulations, John, on landing at IEX and to IEX on a terrific hire. ~JJL

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WAIFC Issues Groundbreaking Guide on Gender Diversity in Finance: “Women in Finance – Compendium of Good Practice”
JohnLothianNews.com

Gender equality is an issue across all business sectors. The Financial Services industry has particularly struggled despite many efforts to make progress, and the derivatives, hedge fund, and private equity areas have lagged even more so. To share practical examples of ways to attract and retain women at all levels of these organizations, and encourage companies to try new ways of addressing this critical business and social issue, the World Alliance of International Financial Centers (WAIFC) has issued a guide titled “WOMEN IN FINANCE – COMPENDIUM OF GOOD PRACTICE.”

Read the rest of the article HERE

Lead Stories

SEC options probe reports rock GameStop stock after Roaring Kitty returns
Martin Baccardax – The Street
GameStop shares retreated in early Tuesday dealing but remain one of the most active names in the market, as reports suggest the Securities and Exchange Commission is looking into options trades tied to the videogame retailer and a noted investor revealed a new bet against the surging meme stock. GameStop (GME) shares added around $2 billion in market value yesterday following a 21% surge tied to weekend social-media posts from the influential retail investor Keith Gill, who is better-known as Roaring Kitty from the WallStreetbets channel on Reddit.
/jlne.ws/3RcFFbl

E*Trade possibly ousting GameStop bull ‘Roaring Kitty’ spurs online backlash
Suzanne McGee and Saqib Iqbal Ahmed – Reuters
(Please note language in paragraph 6 that readers may find offensive)
A report on Monday that online broker E*Trade may consider banning Keith Gill, the meme-stock influencer who ignited frenzied trading in shares of GameStop in 2021, has triggered a backlash on social media sites.
The Wall Street Journal on Monday reported that E*Trade is considering banning Gill, who resumed posting online after a three-year hiatus in recent weeks.
/jlne.ws/4bDchTH

GameStop Burned Andrew Left in 2021. He’s Betting Against the Stock Again; Short seller says he has taken a smaller position this time: ‘It’s a cult stock’
Hannah Miao and Gregory Zuckerman – The Wall Street Journal
Short seller Andrew Left can’t stay away from GameStop. His bet against the videogame retailer three years ago unleashed fury from GameStop devotees. They ordered dozens of pizzas to his house after midnight, hacked into his social-media accounts, shared his personal information, and texted threats and profanities to him and his children. As amateur traders banded together to push the stock higher, he closed out his position at a 100% loss and vowed to stop publishing short-selling reports.
/jlne.ws/3Krp9QZ

‘Spaghetti cannon’ filings for 25 hot-trend ETFs prompt concerns; GraniteShares’ proposed YieldBoost ETFs will sell put options on leveraged ETFs, aiming to profit from volatility
Steve Johnson – Financial Times
A US exchange traded fund issuer may have hit “peak 2024” with plans to launch 25 ETFs that would combine two of the hottest current trends: leveraged exposure and option-selling covered calls.
New York-based GraniteShares has filed to launch a family of “YieldBoost” ETFs, many of them based on single stocks, that would sell put options on leveraged ETFs — again many single-stock — issued by rival providers.
/jlne.ws/3x7Yc1B

Hedge Funds Flip Flop on Yen Option Trade as BOJ ‘Spooks’ Market; Japan’s central bank may reduce its bond purchases next week; Short-term funds change tactics and look to buy yen calls
David Finnerty – Bloomberg
Hedge funds are backpedaling on yen option trades with a sudden spate of bullish bets on the currency, according to market participants.
Just last month leveraged funds piled into option bets that the yen would fall back to 160 versus the dollar. That changed this week with funds now buying yen call options, which gain in value if the currency rises versus the greenback.
/jlne.ws/3RbOlyw

Trump Media asks Nasdaq to cooperate with investigations into trading of its shares
Reuters
The company that owns Donald Trump’s social media platform Truth Social said on Tuesday it had requested the Nasdaq’s cooperation with any investigations into the alleged market manipulation in its shares by so-called “naked” short sellers. Devin Nunes, CEO of Trump Media & Technology Group (TMTG), in a letter to Nasdaq CEO Adena Friedman said that he has requested Congress to urge the Financial Industry Regulatory Authority (FINRA) to issue electronic blue sheets for TMTG’s trading data from April 29 through May 3 and some other dates from May and June.
/jlne.ws/4bN5eI2

Trump Lender Axos Sinks After Hindenburg Shorts Bank’s Stock
Carmen Reinicke – Bloomberg
Axos Financial Inc., which has lent to properties including former President Donald Trump’s flagship New York tower, plunged after Hindenburg Research said it was short the stock because of the bank’s exposure to problematic commercial real estate loans. Shares of the company shed 4.2% Tuesday, paring much of a loss that reached 16% intraday, after Hindenburg, the firm run by Nate Anderson, said the lender’s share price has an “aggressive” valuation compared to its peers. The slump left the stock at a seven-week low.
/jlne.ws/4ebbiM4

Exchanges

Arbelos and B2C2 Complete First Bilateral OTC Option Transaction on BVIV Index
VolMEX Labs Corporation
Arbelos Ltd, a leading principal trading firm with a focus on cryptocurrency derivatives markets, and B2C2, a global leader in institutional liquidity for digital assets, have seamlessly completed the first bilateral option transaction on a Bitcoin volatility index, the BVIV Index (Bitcoin Volmex Implied Volatility). The BVIV Index is a real-time index published by Volmex that measures the constant, forward-looking 30-day expected volatility of BTC, derived from real-time crypto call and put options.
/jlne.ws/4bOgfcc

Intercontinental Exchange Reports May 2024 Statistics
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of technology and data, today reported May 2024 trading volume and related revenue statistics, which can be viewed on the company’s investor relations website at https://ir.theice.com/ir-resources/supplemental-information in the Monthly Statistics Tracking spreadsheet. May highlights include: Total average daily volume (ADV) up 33% y/y; open interest (OI) up 24% y/y, including record OI of 96.5M lots on May 27 Energy ADV up 35% y/y; OI up 25% y/y, including record OI of 62.5M lots on May 23 Total Oil ADV up 30% y/y; OI up 21% y/y Brent ADV up 16% y/y; OI up 12% y/y Record WTI ADV up 83% y/y; OI up 7% y/y Gasoil ADV up 20% y/y; OI up 44% y/y, including record options OI of 220k lots on May 31 Record Other Crude & Refined products ADV up 58% y/y; OI up 28% y/y, including record futures OI of 5.1M lots on May 30 Dubai ADV up 61% y/y; OI up 7% y/y Murban ADV up 160% y/y
/jlne.ws/45ahBLL

Nasdaq May 2024 Volumes
Nasdaq
Nasdaq (Nasdaq: NDAQ) today reported monthly volumes for May 2024 on its Investor Relations website.
/jlne.ws/3V9DqXl

May 2024 figures at Eurex
Eurex
Eurex, Europe’s leading derivatives exchange, reports a 13 percent increase in traded contracts for May compared to the previous year, up from 142.5 million to 161.3 million contracts. Interest rate derivatives went up by 41 percent to 78.3 million contracts. Equity derivatives grew by 15 percent compared to May 2023, while index derivatives decreased 12 percent to 54.5 million traded contracts.
/jlne.ws/4c4xc1D

FTSE China Index Series Quarterly Review – Q2 2024
LSEG
FTSE Russell, a leading global index provider, has today announced the results of the FTSE China Index Series quarterly review for June 2024.
/jlne.ws/3VcKFO3

MarketAxess Announces Monthly Volume Statistics for May 2024
Business Wire
MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of a leading electronic trading platform for fixed-income securities, today announced trading volume and preliminary variable transaction fees per million (“FPM”) for May 2024. Chris Concannon, CEO of MarketAxess, commented: “In May, we delivered strong growth in total credit ADV of 11.1%, driven by a 21.8% increase in emerging markets, a 24.8% increase in Eurobonds and a 43.2% increase in municipal bonds on record municipal bond market share of 8.1%. Our estimated market share of U.S. high-grade portfolio trading was 21.8%, up from 12.8% in the prior year, and up from 15.4% in April, reflecting strong gains in portfolio trading. In May, approximately 55% of our portfolio trading volume was executed on X-Pro, as we continue the roll-out to our largest clients.”
/jlne.ws/3xe7TeN

Regulation & Enforcement

How the SEC has bolstered the US market since the 2021 GameStop frenzy
Michelle Price – Reuters
The latest resurgence of retail trading in GameStop follows major changes aimed at boosting the resilience and transparency of the market following the 2021 “meme stock” saga.
GameStop shares surged on Monday after the stocks influencer “Roaring Kitty” returned to Reddit with a post showing a $116 million bet on the embattled videogame retailer.
It was the first post from the account since 2021 when a meteoric rally in GameStop and other “meme stocks” partly stoked by “Roaring Kitty”, opens new tab caused intense volatility, prompting brokers to restrict trading in some shares and causing massive losses for hedge funds that had bet against them.
/jlne.ws/3KCbxCd

U.S. Prosecutors Probe Global Hacking-for-Hire Operation; Opponents of Elliott Management and Exxon were allegedly targeted, including Argentine officials and the Rockefeller family
Christopher M. Matthews, Bradley Hope and Jenny Strasburg – The Wall Street Journal
U.S. prosecutors are seeking to extradite an Israeli private investigator from London as part of a probe into an alleged globe-spanning hacking-for-hire operation that targeted opponents of hedge-fund firm Elliott Management and oil giant Exxon Mobil, according to court documents and people familiar with the matter.
/jlne.ws/3yY2NUo

CFTC’s Global Markets Advisory Committee Advances Recommendations on Basel III Endgame and Variation Margin Processes; Commissioner Pham Highlights Influence & Value of GMAC Accomplishments
CFTC
The Commodity Futures Trading Commission’s Global Markets Advisory Committee (GMAC), sponsored by CFTC Commissioner Caroline D. Pham, advanced two recommendations to examine the impacts of proposed U.S. bank capital requirements and to improve collateral and liquidity management for non-centrally cleared derivatives.
/jlne.ws/3yKxD2W

Moves

John Palmer to Lead New Markets at IEX, Driving Future Expansion
IEX
Taking the next step in its growth journey, IEX Group, Inc. (IEX) today announced the appointment of John Palmer to lead its efforts to build out new markets. As a member of the IEX Group, Inc. leadership team, Palmer will focus on leveraging the strengths of IEX’s core system and technology to develop new markets and expand its product innovations to create more value for IEX customers. Palmer brings exceptional experience across the financial services industry as a trading domain growth strategist. He draws from expertise across multi-asset exchange trading, derivative pricing models for equities, and leading data technology integrations that create stakeholder value. Prior to joining IEX, Palmer has held numerous leadership positions at Cboe Global Markets, most recently as President of Cboe Digital, overseeing the development of digital asset trading platforms and services.
/jlne.ws/45dVBQs

Strategy

Oil Prices Plunge Likely Amplified by Short Sellers, Options Trade
Giulia Petroni – MarketWatch
The sharp fall in crude oil prices following OPEC+’s latest policy move was largely amplified by short selling and movements in the options market, according to some analysts.
/jlne.ws/4enWSZp

OPEC+ switches strategy to defend market share
John Kemp – Reuters
Oil futures prices have fallen to the lowest level for four months and calendar spreads have slumped after OPEC+ ministers signalled their intention to start increasing production from the fourth quarter of 2024.
Front-month Brent futures closed at $78 per barrel on June 3, the first day of trading following the OPEC+ ministerial meeting on June 2, up just $2 per barrel compared with the same time last year.
/jlne.ws/4aPPMK5

Goldilocks
Cboe (Video)
See #Vol411 for @JoeTigay’s coverage of #earnings, Fed policy and today’s ADP report & its impact on markets.
/jlne.ws/3yWLO4U

Miscellaneous

Here’s what happened in 9 major bubbles in the last 100 years — and what’s going on now
Steve Goldstein – MarketWatch
Bubbles have a lot in common, and not just the obvious, that asset prices rise well ahead of what fundamentals would suggest.
Analysts at Bank of America looked at nine asset bubbles over the last 100 years — from the Dow DJIA on the eve of the Great Depression to the rally in the ARK Innovation ARKK fund in 2021. What they all had in common was that volatility rose as the bubble developed.
/jlne.ws/3xbDE8g

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