The Spread: Can’t Stop GameStop

Suzanne Cosgrove

Suzanne Cosgrove

Editor

Welcome to The Spread, I’m Matt Raebel.

A number of people appeared before Congress on Thursday to discuss the GameStop trading phenomenon, including Vlad Tenev, CEO of Robinhood. Tenev, who apparently donned his best John Wick costume for the hearing, defended his company’s innocence while apologizing to customers.

Also among those interviewed by members of the House Financial Services Committee was Keith Gill, or “Roaring Kitty” as he is known on YouTube, who was hit with a lawsuit this week. The suit, which alleged that Gill misrepresented himself as an amateur investor for personal gain – when he was, in fact, a licensed securities professional – was filed Tuesday in federal court in Massachusetts on behalf of Washington state resident Christian Iovin and other similarly jilted investors. Gill was among the more influential personalities involved in the GameStop situation, and while “Roaring Kitty” is a memorable title to go by, he was better known by his Twitter handle and Reddit username – Deep”Effing”Value – though I’ve censored some of the language in his actual username because this is a family-friendly show.

This week, the investment bank Citi successfully traded and cleared the first client-executed credit default swap index options trades – bit of a mouthful, that – through ICE Clear Credit. This is the first time Citi has done so in the U.S. since ICE launched clearing services for CDS index options last November. Better late than never.

In other news, Cboe announced this week that the exchange operator plans to enable its electronic auction mechanism, AIM, on the Cboe Options Exchange for those trading SPX and SPWX options – that’s options on the S&P 500 and S&P 500 Weekly options, respectively – for smaller trades up to a maximum of 10 contracts. The change is scheduled to take effect on

February 22, and according to Arianne Criqui, senior vice president and head of derivatives and global client services at Cboe, this was done to serve the growing demand for smaller-size contracts, especially from retail traders.

JLN Editors Suzanne Cosgrove and Thom Thompson have a few late-breaking stories up on JLN dot com. One is about the basics of options trading according to finance professor Edward Szado, another about the cryptocurrency exchange ErisX’s proposed NFL binary options, and a third is on Acuiti’s newest report on market data costs. Check out the site for those pieces and more news. 

Anyway, that’s it for me this week – as always, stay safe, and happy trading.

Sources:

Robinhood CEO defends actions in GameStop saga at hearing

Marcy Gordon and Alex Veiga – AP News

http://bit.ly/2OSZMho

Citi clears first CDS index options through ICE Clear Credit

Annabel Smith – The Trade

http://bit.ly/37pDquq

‘Roaring Kitty’ Sued for Securities Fraud Over GameStop Rise

Christian Berthelsen – Bloomberg

http://bloom.bg/3k1RmiZ

Cboe to Enable Electronic Auction Mechanism for S&P 500 Index Options Products, Beginning February 22

Cboe

https://bit.ly/3atXgXb

NFL Calls Time-Out on ErisX’s NFL Binary Options

Thom Thompson – JLN

https://bit.ly/3pyBB4d

Options Basics for Newbies: Mind Your Greeks, Professor Says

Suzanne Cosgrove – JLN

http://bit.ly/3dpNyXG

No, Virginia, There Is No Santa Claus; He Was Demutualized

Thom Thompson – JLN

http://bit.ly/3pCNeHq

 

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Past The Spread Episodes

The Spread – July 23, 2021

The Spread – July 23, 2021

Volatility makes a return appearance as the Delta variant jangles nerves; Treasury bond yields perk up; July options expire; John Lothian chats with Cboe’s Ed Tilly about a World of Opportunity; UBS and SEC reach a settlement; FIA Tech expands; and the Options Institute’s Kevin Davitt explains why contract size matters in the “Term of the Week.”

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Options traders torn between higher Inflation and steady Fed policy; June market share up at MIAX; John Lothian talks about a World of Opportunity; SEC charges binary options shop with fraud; Moscow Exchange set to offer quarterly options on U.S. stock index futures; and the Options Institute’s Kevin Davitt talks about implied volatility in the “Term of the Week.”

The Spread – July 9, 2021

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Chicago, a data destination; SEC, Robinhood and payment for order flow; John Lothian weighs in with his take; Retail trading continues to percolate; and Cboe’s Kevin Davitt explains the differences between equity and index options in the “Term of the Week.”

The Spread – July 2, 2021

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Finra socks Robinhood with its biggest-ever fine; Cboe acquires Chi-X Asia Pacific; OCC reports another volume gain; NIO takes its cue from options; John Lothian weighs in with his take; Looking for volatility; and Jermal Chandler explains hedging in the options “Term of the Week.”

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