“Alex Perry’s Optionstopia” takes a look at this week’s options news highlights: Regulators Crack Down on Trading apps; Adam Dell Launches Domain Money; The CME Group Announces New Options Records
Options News Script
1-Monday’s Stock Market Rollercoaster
Day-Trader Interest in Put Options Adds to Capitulation Fears
Bailey Lipschultz – Bloomberg
This week started off with a wild stock market selloff that left investors on the edge of their seats. The market seemingly took a nosedive on Monday… so much so that $3 trillion in market value was lost, but eventually recovered late Monday afternoon. But concerns from the selloff still linger with some traders, with Bloomberg reporting that retail investors are trying to protect themselves from more market selloffs. Bloomberg says online discussions on the Reddit group WallStreetBets are “focusing on buying put options instead of calls,” specifically when it comes to the world’s largest ETF fund, the SPDR S&P 500 trust, ticker SPY. Overall, the news site suggests that while first-time retail investors may be experiencing anxiety, this “contrasts with trends seen for Wall Street pros.”
2-Regulators Cracking Down on Trading Apps
Analysis-Will the games stop? SEC mulls crackdown on trading apps
Katanga Johnson – Reuters
Fidelity accused of ‘unethical’ process for options trading approvals
Madison Darbyshire – Financial Times
The world of meme stocks is doing some safeguarding of its own. A year since the GameStop trading frenzy and Bloomberg reports that regulators like the SEC are trying to come up with ways to more closely monitor trading apps like Robinhood, which could often compel users to trade or purchase products through “artificial intelligence [and] video game-like features.” The report notes the SEC’s concerns for younger investors, with practices like “Trading contests…rewards… lively sounds and bright colors…” Fidelity is yet another brokerage that faces scrutiny, as Reuters reported that the company was charged with “rubber-stamping” applications improperly in order for users to trade options. The report notes that Massachusetts’ securities regulator called this “blatantly unethical,” because it allowed inexperienced and ineligible investors to take part in trading meme stocks, often without fully understanding the risks involved.
3-CME Group Announces Multiple Equity Index Futures and Options Records
In other news, the CME Group achieved new records this week, announcing multiple equity index futures and options volume records from trading on January 24, with a single-day trading volume record of well over 15.8 million contracts. The Micro E-mini Equity Index futures also reached a record 6.5 million contracts across the S&P 500, Nasdaq-100, Dow Jones Industrial Average, and Russell 2000, up from the previous milestone of 5.1 million contracts on Jan 21st.
4-Adam Dell Launches Domain Money
When it comes to investment services, there’s a new kid on the block – Domain Money, an investing platform launched this week. Founded by Adam Dell, the former head of product at Marcus by Goldman Sachs, Domain Money will allow its users to trade stocks and cryptocurrency. The company has already raised over $30 million from prominent investors, which include Bessemer Venture Partners, Maveron, and RRE Ventures.
5- This is John Lothian Podcast: Small Exchange SPRE Options to Launch January 25, 2022
Finally, the Small Exchange launched its first options contract on Small Precious Metals Product (SPRE) index futures on Tuesday. CEO Donnie Roberts sat down with JLN to discuss the new product, the exchange’s plans for future options contracts, and the impending deal for the company to be acquired by Crypto.com. You can find the interview in the newest installment of the This is John Lothian Podcast.
That’s all for now over here, but tune in for this week’s edition of John’s Take, where John sits down with Henry Schwartz for JLN’s Open Outcry Traders History Project. Also, be sure to check out a previous “Options Term of the Week”, where Russell Rhoads explains what the VIX Index measures.
THIS HAS BEEN ALEX PERRY FOR JLN. THANKS, AND WE’LL SEE YOU NEXT TIME.
John talks with Henry Schwartz for “John’s Take”
John's Take Script
This is John Lothian with John’s Take for The Spread for John Lothian News January 28, 2022. Today I will share some key video clips with you of an interview I did with Cboe’s Senior Director, Head of Product Intelligence, Data & Access Solutions, Henry Schwartz, for The Path to Electronic Trading video series from MarketsWiki Education and John Lothian News.
Henry Schwartz wanted to be an actor when he grew up, but then he decided he wanted to make a lot of money. Like a lot of other geeky kids who grew up watching movies like War Games and Tron, Schwartz was interested in computers. And that interest and a friend’s father changed his career plans.
Henry’s father was a lawyer who wanted Henry to follow him into the practice of the law. But that is not what happened, instead this is.
Schwartz’s first summer on the floor of the CBOE was in 1987 and this is how he described the experience.
Then one day Schwartz runner’s job at Hull Trading almost turned into being a flier in what he describes as one of his funniest experiences.
Schwartz figured out in 1987 that markets have risk with long tails that could follow him all the way back to college, but that cash is king.
When Hull Trading wanted to open an office in Frankfurt to trade the newly electronic markets, Schwartz raised his hand and his geeky gamer side paid off again.
But it was not really the Frankfurt office Schwartz wanted, but the Paris office. This proved a powerful lesson in the difference between open outcry trading on the Monep and electronic trading on DTB.
You can watch the entire two part interview with Cboe’s Henry Schwartz next week on JohnLothianNews.com.
This has been John Lothian.
Term of the Week
What is The VIX Index Anyway? with Russell Rhoads