Tesla’s the latest example of options underpricing the possibility of big moves

Jul 9, 2024

Observations & Insight

Clear Street’s Bold Move: Former Cboe Chairman & CEO Ed Tilly Joins Fintech to Revolutionize Clearing and Custody Systems

Clear Street, a fintech startup founded in 2018, is making waves in the financial services industry with its ambitious plan to revolutionize clearing and custody infrastructure and its big-name hiring of former Cboe Global Markets Chairman and CEO Ed Tilly. In an interview with John Lothian News, CEO Chris Pento and President-Designate Tilly outlined the company’s vision and progress.

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Lead Stories

Tesla’s the latest example of options underpricing the possibility of big moves
Steve Goldstein – MarketWatch
Tesla shares surged last week when it released surprisingly strong delivery figures – so much so that the stock-price gain was nearly twice as large as its straddle cost.
An option straddle involves the purchase, or sale, of both a call and put at the same strike price and expiration date, which pay off when the price moves by a large amount in either direction.

Edward Tilly joins Clear Street less than a year after resignation from Cboe; Tilly resigned as chief executive of Cboe last September following the conclusion of an investigation that determined he had failed to disclose personal relationships.
Claudia Preece – The Trade
Edward Tilly has been named president at Clear Street, 10 months after he resigned as chief executive of Cboe. In the role, Tilly is set to work closely with Chris Pento, CEO of Clear Street, jointly leading the firm through the next phase of growth. Speaking to the appointment, Pento asserted: “The time is right for us to welcome Ed to the executive team as we continue to super-charge our growth plans and take Clear Street to the next level.”

Asia’s Richest Banker Gets Caught in Adani-Hindenburg Crossfire; US hedge fund Kingdon shorted Adani shares through Kotak unit; Sebi notice adds to unwelcome spotlight on Kotak Mahindra
Preeti Singh and Advait Palepu – Bloomberg
The lender owned by Uday Kotak, Asia’s richest banker, has been asked to assist regulators as part of their probe into the short seller attack against Gautam Adani’s empire, a sign of scrutiny on India firms that give foreign capital access to local markets. One of Kotak Mahindra Bank’s funds was the vehicle through which a US-based hedge fund, in partnership with Hindenburg Research, shorted Adani shares before the publication of a short-seller report that alleged widespread corporate malfeasance and triggered a massive market rout.

Elliott Says LME Failed to Disclose Documents in Nickel Case; Elliott restarts UK fight court with London Metal Exchange; Appeal to rake over decision to cancel $12 billion of trades
Jonathan Browning – Bloomberg
Hedge fund Elliott Investment Management renewed its legal fight with the London Metal Exchange over the 2022 nickel crisis, saying that the exchange failed to disclose crucial documents that show how it could have responded to the runaway short squeeze. Elliott argued in the Court of Appeal on Tuesday that the exchange’s boss ignored the role of his own monitoring teams before he took the “unprecedented and momentous” decision to cancel billions of dollars of nickel trades.

JPMorgan’s Trading Desk Warns S&P 500 Will Turn Volatile on CPI; Inflation reading Thursday is key to Fed’s direction on rates; Options traders bet on S&P swinging 0.9% in either direction
Jess Menton – Bloomberg
Investors should brace themselves for a bout of stock market volatility this week after a lengthy period of calm, based on a warning from JPMorgan Chase & Co.’s trading desk.
The options market is betting the S&P 500 Index will move by 0.9% in either direction by Thursday, based on the price of at-the-money straddles expiring that day, according to Andrew Tyler, the trading desk’s head of US market intelligence. The latest consumer price index will be reported prior to that session, which could trigger a move with traders betting on easing inflation driving the Federal Reserve to cut interest rates twice in 2024.

Cryptoverse: Traders hold breath for ether ETF fever
Hannah Lang – Reuters
Ether might be coming close to its moment in the sun.
The world’s No.2 cryptocurrency has remained in the wings this year as big brother bitcoin soared to all-time highs on the back of new U.S. exchange-traded funds meant to track its price.
But as companion ETFs for ether are set to hit the market soon, some market players predict a price rally beyond its Nov. 2021 all-time high of $4,867.60 could be on the cards.


Cboe files for SEC approval to list Solana ETFs, starts clock for required decision
Suzanne McGee – Reuters
Exchange operator Cboe Global Markets filed a request with the U.S. Securities and Exchange Commission on Monday seeking to list exchange-traded funds (ETFs) tied to cryptocurrency Solana, requiring the agency to make a decision by March. Under SEC rules, the agency has 240 calendar days to decide whether to approve or deny Cboe’s “19b-4” application to list the products from VanEck and digital asset manager 21Shares. They are the first proposed ETF products tied to the price of Solana, the fifth largest cryptocurrency, according to CoinGecko.

Cboe Global Markets Announces Winners of the 2024 Options Institute Research Grant Program, Sponsored by S&P Dow Jones Indices and SpiderRock Advisors
Cboe Global Markets, Inc. (Cboe: CBOE), the world’s leading derivatives and securities exchange network, today announced the recipients of The Options Institute Research Grant Program for 2024, sponsored by S&P Dow Jones Indices (S&P DJI) and SpiderRock Advisors. The recipients for the grant programs are as follows:

CME Group Appoints Mike Dennis as Global Head of Fixed Income
CME Group
CME Group, the world’s leading derivatives marketplace, today announced the appointment of Mike Dennis as Global Head, Fixed Income. In this position, Dennis will oversee the company’s largest, most actively traded global benchmark futures and options contracts on SOFR and U.S. Treasuries, including the 30-year bond, 10-, 5- and 2-year notes that enable investors to manage risk across the entire U.S. yield curve. He will also lead BrokerTec, the world’s most liquid electronic cash trading platform for U.S Treasury benchmarks, E.U., U.K. and U.S. Repo trading. Dennis will report to CME Group Chairman and Chief Executive Officer Terry Duffy and serve on the company’s Management Team. He will resign from the CME Group Board of Directors effective immediately and begin this position with the company on August 5.

New Product Summary: Initial Listing of Q1 Seasonal Strip Weather Futures and Options Contracts – Effective July 29, 2024
CME Group
Initial Listing of Q1 Seasonal Strip Weather Futures and Options Contracts


Earnings Strategy Q&A
tastytrade (Video)
Tune in for a look at the markets today after a big rally in Tesla and Nvidia. The tastylive crew explores viewer questions related to earnings strategies, long-term options strategies, and much more.

Fed & Senate
Cboe (Video)
Watch #Vol411, where Tim Biggam @delta_desk discusses Jerome Powell talking with the U.S. Senate today and the U.S. House of Representatives tomorrow, the $VIX futures term structure, 15-day straddle and more.


Derivatives Forum Amsterdam 2024
We’re pleased to announce the next Derivatives Forum Amsterdam. This event will take place in-person, enabling you to take full advantage of exclusive networking opportunities with your peers. Co-hosted with ABN AMRO Clearing Bank, we’re grateful to announce the support of Optiver and IMC as sponsors, and FIA EPTA and DUFAS as supporting partners. Date: Thursday, 11 July 2024, 10:00 am – 6:00 pm. Location: ABN AMRO Corporate Headquarters. Sessions will be recorded.

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