Tesla short sellers lose $1.5 billion in a single day; Options on Bakkt Bitcoin (USD) Monthly Futures Contracts Trading to Begin on Monday, December 9, 2019

Oct 25, 2019

Lead Stories

Tesla short sellers lose $1.5 billion in a single day
Stephen Gandel – CBS News
Wall Street short sellers, many of whom have long believed Elon Musk’s electric car maker Telsa [sic] is a junker, got run over on Thursday, losing about $1.5 billion in one day on their bearish bets after the company reported a rare quarterly profit.
Telsa’s [sic] stock price jumped about $45 to nearly $300 after Musk’s company reported late on Wednesday that the company had turned a profit in the third quarter of $342 million. Analysts had been expecting the company to lose $72 million, according to FactSet.

*****MR: From a CNBC article published Wednesday entitled, ‘One options trader makes a big bet on a Tesla earnings beat: ”If the trader had just been buying those 280-strike calls, Tesla would need to jump more than 12% from yesterday’s close for this trade to break even at November expiration. However, by way of selling in-the-money call contracts against this trade, the trader likely cut down their break-even price significantly, making this bet easier to justify placing.” Turns out, Tesla did jump more than 12% – in fact, it jumped 20%.

Options on Bakkt Bitcoin (USD) Monthly Futures Contracts Trading to Begin on Monday, December 9, 2019
ICE Futures U.S.
ICE Futures U.S., Inc. will list the new Options on Bakkt Bitcoin (USD) Monthly futures contracts for trading for trade date Monday, December 9, 2019. The new option will be listed on ICE Futures U.S., Inc., and will be cleared by ICE Clear US, Inc. The new option will be European style, and will exercise into the Bakkt Bitcoin (USD) Monthly futures contract; the last trading day for each monthly option contract will be two business days prior to the last trading day of the underlying futures contract month.

Bakkt’s Slow Start Doesn’t Mean Bitcoin Futures Have Flopped
Galen Moore – Coindesk
It’s a lively time for bitcoin derivatives – or at least for those writing about them. For those trading them, it may be business as usual. The Chicago Mercantile Exchange (CME) announced Friday it is preparing to offer options trades on its bitcoin futures contract. It’s a surprising move, because options volume to date rounds to zero, as a percentage of reported volume in futures and swaps.

Vanity Fair’s Trump Trade Story ‘Nonsensical,’ Exchange CEO Says
Nick Baker – Bloomberg
The head of the exchange where, according to a Vanity Fair article last week, a cabal of investors suspiciously earned billions of dollars by trading before market-moving news says the transactions didn’t happen.
The article’s thesis is built atop a faulty reading of the trading record, said Terry Duffy, chief executive officer of CME Group Inc. He said it mistakenly summed up all volume for those derivatives during spans of time and implausibly attributed that buying and selling, spread across thousands of transactions, to a single bad actor or group of cheaters.

Thought Brexit Mess Couldn’t Get Worse? It Has
Alan Crawford – Bloomberg
Just when you thought Brexit couldn’t get any more intractable, it’s plunged further into the absurd.
Frustrated by Parliament from leaving the European Union on Oct. 31, Boris Johnson’s drive to break the deadlock with an election relies on the same lawmakers to go along with him.

Exchanges and Clearing

Nasdaq Smart Options A cost-efficient, streamlined options data delivery alternative
The Nasdaq Smart Options data feed is designed to provide a cost-efficient, low-bandwidth alternative to the full Options Price Reporting Authority (OPRA) data feed while still delivering the necessary dataset that firms require for options trading. Nasdaq Smart Options data delivery supports NBBO and Trade messages as well as administrative messages for all listed options. We filter out the Individual BBO data, reducing the noise of data overload and downsizing delivery to help you save more than 80% of the bandwidth requirement of the full OPRA feed.

Launching CME SPAN 2
CME Group
CME SPAN 2 will be rolled out for specific product groupings in a phased multi-year approach after extensive testing, starting with major NYMEX Energy futures and options on futures. CME Clearing will work with clearing members and service providers to test the technology for computing CME SPAN 2 margins in H1 2020. Over the next few years, margins for diversified portfolios will flow from products migrated to CME SPAN 2 and existing SPAN. Appropriate levels of offsets will continue to be provided across products in SPAN and CME SPAN 2, with CME Clearing supporting both frameworks.

Regulation & Enforcement

Libor’s 2021 Demise Is Far From Assured, CME CEO Duffy Says
Nick Baker – Bloomberg
Regulators say Libor is guaranteed to live only about 800 more days. But the head of exchange operator CME Group Inc., whose most-traded contract needs the London interbank offered rate to survive, says the transition to a successor might take longer than that.

****JB: Not surprised. In all my years I have never, ever seen Wall Street meet a deadline for compliance with anything no matter how long they were given. Then again, my parents would say the same thing about me when I had chores to do.

Notice of Disciplinary Action – MCNAMARA OPTIONS LLC
CME Group
The Exchange shall designate the products in which block trades shall be permitted and determine the minimum quantity thresholds for such transactions. The following shall govern block trades: Unless otherwise agreed to by the principal counterparties to the block trade, the seller, or, in the case of a brokered transaction, the broker handling the block trade, must ensure that each block trade is reported to the Exchange within the time period and in the manner specified by the Exchange. The report must include the contract, contract month, price, quantity of the transaction, the respective clearing members, the time of execution, and, for options, strike price, put or call and expiration month. The Exchange shall promptly publish such information separately from the reports of transactions in the regular market.


How to Prevent Your Options Strategy From Backfiring
Steven M. Sears – Barron’s
One of the great investing riddles is how to reduce portfolio risk without sacrificing profitability. Many investors try diversifying portfolios with stocks and bonds. Others buy defensive put options that increase in value when associated security prices decline.


Global protests gaining attention in financial markets
Marc Jones and Mike Dolan – Reuters
An alarming spread of street protests and civil unrest across the world in recent weeks looms large on the radar of financial markets, with investors wary the resulting pressures on stretched government finances will be one of many consequences.
Money managers and risk analysts seeking a common thread between often unconnected sources of popular anger – in Hong Kong, Beirut, Cairo, Santiago and beyond – reckon the unrest is particularly worrying following years of modest global economic growth and relatively low joblessness.

On the Cost of ‘Free’ Trades
Don Ross – TABB Forum
The investment world is caught up in the hype over zero-commission retail trades. While day traders, with their hundred-share orders, are happy, however, progress for institutional traders has been minimal. Though their electronic commission rates have also fallen, by roughly half over the past decade, the vastly higher market-impact costs they suffer have barely budged.

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