Observations & Insight
SGX Execs See Return to Macro Trades; COVID-Led Push Toward Digitalization
Suzanne Cosgrove – John Lothian News
In a press briefing, Singapore Exchange Limited (SGX) CEO Loh Boon Chye Thursday said the pandemic has created both challenges and extreme market moves, and the resulting economic damages are just now beginning to unfold.
However, since Asia was pushed into the COVID cycle earlier than other regions, Loh said Asia is expected to recover from the COVID fallout more quickly.
Some pre-COVID-19 trends accelerated as the virus continued, Loh said. For example, while interest rates were low to start, the more fragile post-COVID economy clearly ensures they will remain low for some time.
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Stock Bulls Stare Down Next Hurdle: VIX’s Dismal August History
Katherine Greifeld – Bloomberg
Equity bulls contending with rising coronavirus case counts and increasingly bleak economic data have something else to worry about: August.
The Cboe Volatility Index — known as the market’s “fear gauge” — has gone up an average of 11.7% in August over the past 15 years, more than any other month. May is a distant second, with an average 6.8% rise. Increased equity turbulence generally means stocks are struggling: The S&P 500 has dropped 0.4% in August on average since 2005.
The U.S. election is getting ugly – and investors are getting nervous
David Randall and April Joyner – Reuters
Investors are increasingly preparing for the risk of a contested U.S. presidential election come the fall, worried that an ugly political situation will create volatility across markets. A key risk is that Republican President Donald Trump is already questioning the legitimacy of the election, analysts said. His Democratic challenger, former Vice President Joe Biden, currently has a 9 percentage point advantage among likely voters and a significant advantage among voters who are undecided, according to a Reuters/Ipsos opinion poll.
Kodak Stock’s Unusual Surge Raises Eyebrows on Wall Street
Al Root – Barron’s
Eastman Kodak shares are on an extraordinary run, gaining roughly 300% Wednesday and 200% Tuesday before slipping 10% on Thursday.
A 25% gain came on Monday, before The Wall Street Journalreported Tuesday that the company had landed a $765 million government loan, authorized under the Defense Production Act, to help the U.S. bring production of ingredients for generic drugs back onshore. The company and U.S. International Development Finance Corp. confirmed the news later in the day.
It was a major surprise. Before Tuesday, Kodak (ticker: KODK) wasn’t in the drug-ingredient business.
Goldman’s Asia Derivatives Sales Head Spitzer Dies in Hong Kong
Cathy Chan – Bloomberg
Mark Spitzer, head of equities derivatives sales for Asia-Pacific at Goldman Sachs Group Inc., died in a “tragic accident” in Hong Kong, according to an internal memo.
“We are deeply saddened by this sudden and terrible loss. Our immediate focus is supporting Mark’s family and close colleagues during this difficult time,” a Hong Kong-based spokesman for Goldman Sachs said in an emailed reply to Bloomberg.
$745 million in Bitcoin options expire tomorrow: What to expect
Liam Frost – Decrypt
Bitcoin options contracts for $745 million will expire tomorrow. Depending on whether a large number of traders decide to close the contracts, Bitcoin’s price might get affected. Such situations are “not anything we can really prepare for,” say trading experts.
Exchanges and Clearing
Cboe Global Markets Reports Results for Second Quarter 2020
Cboe Global Markets, Inc. (Cboe: CBOE) today reported financial results for the second quarter of 2020.
“I am pleased to report solid financial results for the quarter, clearly highlighting the strength of the diversification of our revenues from multiple asset classes and non-transactional services. We achieved record trading volumes in U.S. cash equities and multi-listed options, fueled by growth in retail trading activity.
Exchange operator Cboe’s profits rise as retail trading surges
John McCrank – Reuters
Exchange operator Cboe Global Markets reported higher second-quarter earnings on Friday, driven by a surge in retail investor participation in the markets that boosted stock and options trading volumes, offsetting lower institutional demand.
The Chicago-based company hit record trading volumes in U.S. cash equities and multi-listed options during the quarter ended June 30, fueled by the spike in Main Street trading activity, Cboe Chief Executive Officer Ed Tilly said on a call with analysts.
Increase of Spot Month Position Limits for Five (5) Copper Futures and Option Contracts
Effective at the close of trading August 28, 2020 for the September 2020 contract month and beyond, the Commodity Exchange, Inc. (“COMEX” or “Exchange”) will increase the spot month position limits for five (5) copper futures and option contracts from 750 to 1,000 futures contract equivalents as noted below and in Exhibit A of COMEX Submission No. 20-343. Please note that the spot month limits in the August 2020 contract month are unchanged.
Increase of Spot Month Position Limits of Four (4) Palladium Futures and Option Contracts
Effective at the close of trading August 28, 2020 for the September 2020 contract month and beyond, the New York Mercantile Exchange, Inc. (“NYMEX” or “Exchange”) will increase the spot month position limits for four (4) Palladium futures and option contracts from 25 to 50 futures contract equivalents as noted below and in Exhibit A of NYMEX Submission No 20-345. Please note that the spot month limits in the August 2020 contract month are unchanged.
Options Markets – Delisting of Denbury Resources Inc (DNR)
MIAX Exchange Group
Denbury Resources Inc (DNR) will be de-listed from the MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange effective on Monday, August 3, 2020. All GTC orders resting on the MIAX order books in DNR will be canceled at the close of business on Friday, July 31, 2020.
Amendment to Rule 1701, Consolidated Audit Trail Compliance Rule – Definitions, to Amend the Requirements for Firm Designated IDs
MIAX Exchange Group
MIAX Options, MIAX PEARL and MIAX Emerald (“Exchanges”) have received approval from the Securities and Exchange Commission to amend the definition of Firm Designated ID in all three Exchanges’ Rule 1701. The rule change became effective as of July 31, 2020. Please refer to the following Regulatory Circulars for further details.
Cboe to Bring Periodic Auctions to U.S. Equities
Traders Magazine (press release)
Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, today announced plans to introduce periodic auctions – an innovative mechanism based on a model it first launched in Europe – for the trading of U.S. equities, subject to regulatory approval. With the planned launch of U.S. periodic auctions, Cboe aims to build on the success of its European offering and bring to the U.S. equity markets a new, intraday auction mechanism that delivers beneficial execution outcomes for all market participants.
Q2 2020 trends in futures and options trading
5 August 2020 • 10:00 AM – 11:00 AM ET • Webinar
Global futures and options trading grew by 32% to record-setting 21.9 billion contracts in the first half of 2020 compared to 2019, according to figures released by FIA. In the second quarter, the total number of traded contracts was 10.46 billion, down 8.4% from the record-breaking 11.41 billion contracts traded in Q1 2020, but up 21.8% from the second quarter of 2019. In fact, the second quarter volume was higher than any other quarter in the history of the industry aside from the first quarter of 2020.
Apple just announced its 5th stock split in history. Here’s what that means — and how many shares you’d have if you bought one before its first split in 1987. (AAPL)
Matthew Fox – Markets Insider
Apple will split its stock for the fifth time in its history, the iPhone maker said on Thursday after reporting strong earnings that beat analyst estimates.
Apple will enact a 4-for-1 split on August 24, meaning that every one share currently owned by an investor today will turn into four shares. At the same time, Apple’s stock price will be quartered, going from around $400 today to around $100 when the split is enacted.
Apple’s dividend will also be quartered to reflect that share change once the split goes through.
(Podcast) Option Block 922: Hunting for Shady Business in Kodak
Option Block – Options Insider Network