The Spread: A Freight Train of Volatility?

Matt Raebel

Matt Raebel

Editor

This week on The Spread, Cboe is set to acquire BIDS, TT branches out to South Africa, and more.

Produced by Mike Forrester.

 

Transcript

Welcome to The Spread, I’m Matt Raebel. I’m back to shooting from home temporarily, but that doesn’t mean the options world is stopping, so let’s get into what happened this week – but first, a quick story from late last week. Cboe announced on October 16th that it plans to acquire BIDS Trading, the largest independent block trading ATS in the U.S. by volume, to complement and expand Cboe’s existing offerings to U.S. customers. Maybe this is the first step in Cboe becoming the Costco of securities trading; instead of selling bulk Keurig pods, Cboe lets you execute block trades through BIDS. If they go that route, I hope Cboe also adds one of those little hot dog stands in their lobby that Costcos have – as long as they don’t have ketchup. That’s against city law. Nasdaq reported that its net revenues were up 13 percent from last year in Q3 of this year, in part due to record-high options volumes, which increased 52 percent year-on-year. Yet another case of options pulling folks through what has been an otherwise extremely difficult year. Also, Softbank is in the news again. The company has increased its equity positions by about $20 billion. They’re pretty tight-lipped about their strategy, but Bloomberg reports that the company has been putting on call spread positions — buying a lot of out-of-the-money calls in the hope that they’ll profit when equity prices go up and selling calls at even higher prices to reduce initial costs. Or at least, that’s what they seem to be doing. On the flipside, Barclays has an intriguing prediction about the election that goes against Softbank’s bets; while Softbank and many others are betting on a freight train of volatility continuing throughout the rest of the year, the investment bank is betting the VIX falls to “at least 20” after the election. But hey, crazier things have happened this year, am I right? Chicago’s Trading Technologies, or TT, announced a deal with Applied Derivatives, which is based in Cape Town, South Africa, to distribute the TT platform from the Johannesburg Exchange, JSE, giving Applied Derivatives’ customers access to all the tools offered by TT’s platform, including tools for options traders. Unfortunately TT’s platform is not compatible with those sweet exosuits from “District 9,” but maybe in 2021 they’ll roll that out. And finally, JLN’s Suzanne Cosgrove and Sarah Rudolph covered the annual Chicago Conference on Futures and Derivatives. John himself has also been busy writing a bunch of new articles, and we have two new editions of Path to Electronic Trading starring Ralph Moses and Mike Unitech respectively. Check that out on John Lothian News dot com. That’s gonna do it for The Spread this week – stay safe, and happy trading.

 

Sources

Cboe Global Markets to Acquire BIDS Trading
Traders Magazine
https://bit.ly/354NiaP

Higher Trading Volumes, Index Revenues Boost Nasdaq
Shanny Basar – Traders Magazine
https://bit.ly/2IUQXRc

SoftBank Amasses Over $20 Billion in Public Stock Unit
Giles Turner and Dinesh Nair – Bloomberg
https://bloom.bg/2T836nI

Barclays Sees VIX Plunging to Pre-Covid Level in Clear Biden Win
Yakob Peterseil – Bloomberg
https://bloom.bg/2FQXUBD

Trading Technologies Contracts with Applied Derivatives for Distribution of the TT Platform from South Africa
Trading Technologies International, Inc.
https://bit.ly/3m5Fa0B

Applied Derivatives becomes first broker to distribute Trading Technologies platform in South Africa
Annabel Smith – The Trade
https://bit.ly/31tdLOc

Regulation and Enforcement Continue Apace Despite COVID’s Onslaught, Regulators Say
Suzanne Cosgrove and Sarah Rudolph – John Lothian News
https://bit.ly/34ij2dc

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