Stock Traders Are Dumping Virus Hedges After ‘Peak Fear’ Passes; Exchange operator Cboe profit beats as lower costs offset weak trading

Feb 7, 2020

Lead Stories

Stock Traders Are Dumping Virus Hedges After ‘Peak Fear’ Passes
Yakob Peterseil – Bloomberg
Worrywarts on Wall Street fretting traders are being complacent may want to look away from options markets right now. Investors are sending demand for protection back to levels seen before the coronavirus became an epidemic, heeding the advice of Citigroup Inc. to ditch hedges. With panic cooling about a disease which continues to claim new victims after killing 636 people and infecting 31,000 in China, derivatives markets are all but ready to consign it to history.
/bloom.bg/2vZlkiW

Exchange operator Cboe profit beats as lower costs offset weak trading
Bharath Manjesh – Reuters
Exchange operator Cboe Global Markets Inc. beat Wall Street estimates for fourth-quarter profit on Friday, as it sharply reduced expenses to counter a hit from lower trading volumes.
“Lower volatility dampened trading, particularly in our suite of proprietary products, which experienced exceptionally strong trading in 2018’s fourth quarter,” said Edward Tilly, Chief Executive Officer, in a statement. Transaction fees declined 30% to $394.2 million in the quarter, as trading volumes fell across its segments.
/reut.rs/2OB18KF

Tesla looks like bitcoin and there’s one way to benefit, trader says
Keris Lahiff – CNBC
Tesla has been on a wild ride this week. A massive surge on Monday and Tuesday sent shares up nearly 50% over those two days, but a decline on Wednesday and pause on Thursday reduced those gains to 14% on the week. Todd Gordon, managing director of Ascent Wealth Partners, says the surprise surge could continue — and he uses an unconventional comparison to make the case. “We’re going to look at the hot story stock here — Tesla. An unbelievable run that rivals that parabolic move that we saw even in bitcoin last year and the year before that,” Gordon said Thursday on CNBC’s “Trading Nation.”
/cnb.cx/3845d1A

Two Firms Are Clashing About the Fate of U.S. Small-Cap Stocks
Joanna Ossinger – Bloomberg
Cantor Fitzgerald LP and Susquehanna Financial Group LLLP agree that using options on the iShares Russell 2000 exchange-traded fund is a good idea. They just disagree on whether to be bullish or bearish. Bearish contracts on the Russell 2000 ETF have become less expensive versus bullish ones as stocks have rallied on receding fears about the potential extent of fallout from coronavirus. The fund, known by its ticker IWM, has climbed 4% this week through Thursday, while the SPDR S&P 500 ETF Trust has gained 3.8%.
/bloom.bg/2H1idsY

Bitcoin Options show cupid price effect, come Valentine’s Day
Aakash Athawasya – AMB Crypto
Bitcoin could find the perfect match in the Options market. It has been over four months since Bitcoin was over $10,000 and an unlikely suitor could take it back to the five-figure paradise. Bitcoin Options, an important metric of market sentiment, is providing a favorable outlook of the larger spot market, with Valentine’s day around the corner. According to Su Zhu, CEO of Three Arrows Capital, there is an “aggressive skew” for Bitcoin Options expiring on Friday, dated 14 February 2020.
bit.ly/37d7yWZ

China Traders Seek Cover Far and Wide After Volatility Shock
Bloomberg
As the dust settles on China’s record $720 billion stock sell-off, traders are navigating the surging volatility to figure out new strategies.
On their radar are shares of firms seen to benefit from the coronavirus outbreak — targets include companies offering work-from-home technologies like office software maker Kingsoft Corp. or Dr. Peng Telecom & Media Group Co., which is providing its video conference services for free until March.
/bloom.bg/2OAVZC6

Exchanges

Cboe Global Markets Reports 2019 Fourth Quarter and Full Year Results
Cboe press release
Cboe Global Markets, Inc. (Cboe: CBOE) today reported financial results for the 2019 fourth quarter and full year.
bit.ly/2H2KCiv

Exchange operator Cboe profit beats as lower costs offset weak trading
Bharath Manjesh – Reuters
Exchange operator Cboe Global Markets Inc. beat Wall Street estimates for fourth-quarter profit on Friday, as it sharply reduced expenses to counter a hit from lower trading volumes.
“Lower volatility dampened trading, particularly in our suite of proprietary products, which experienced exceptionally strong trading in 2018’s fourth quarter,” said Edward Tilly, Chief Executive Officer, in a statement.
/reut.rs/2OB18KF

Amendments to the WTI Houston vs. WTI Trade Month Average Price Option and the WTI Houston vs. Brent Trade Month Average Price Option Contracts
CME Group
Effective on trade date Friday, February 26, 2020, the New York Mercantile Exchange, Inc. (“NYMEX” or “Exchange”) will amend the title, style, underlying futures, strike price listing, and expiration to the WTI Houston vs. WTI Trade Month Average Price Option and the WTI Houston vs. Brent Trade Month Average Price Option contracts (the “Contracts”) as noted in the table below and in Exhibit C of NYMEX Submission No. 20-106. Additionally, the Exchange is removing the diminishing balance for the Contracts as they are no longer average price option contracts. Please note that the contracts have zero open interest and the change will be made effective with the April 2020 contract month and beyond.
bit.ly/2OBVDeA

Regulation & Enforcement

SR-NASDAQ-2020-005 Notice & Approval
Nasdaq
Proposes certain changes regarding investments of the First Trust TCW Opportunistic Fixed Income ETF
bit.ly/386t4O8

Education

How to Trade Options (Video)
John D’Antona Jr. – Trader’s Magazine
bit.ly/2uuBAb7

Miscellaneous

Where Are All the Women CEOs?
Vanessa Fuhrmans – The Wall Street Journal
Why, when women earn the majority of college degrees and make up roughly half the workforce, do so few occupy the chief executive job? Women today lead 167 of the country’s top 3,000 companies. That’s more than double the share a decade ago, but still under 6%. For many, the barrier isn’t only a glass ceiling at the very top, but also an invisible wall that sidelines them from the kinds of roles that have been traditional stepping stones to the CEO position. A Wall Street Journal study of executives at the top companies, the biggest publicly traded firms by market value, shows that men on the way up overwhelmingly get the management jobs in which a company’s profits and losses hang in the balance.
/on.wsj.com/31ymcH3

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Could stock market volatility return in 2020?

Could stock market volatility return in 2020?

Lead Stories Could stock market volatility return in 2020? Bloomberg Stock market volatility, as measured by the Cboe Volatility Index, is near 5-year lows even as instability in the Middle East and the coronavirus have led to pockets of...

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