The Spread: Crash and Burn

Suzanne Cosgrove

Suzanne Cosgrove



This week on The Spread: the coronavirus causes crashes not seen since 2008, derivatives trading hits record volumes for major exchanges, Robinhood has yet another outage, and the OCC adds two clearing-side veterans to its board of directors.

Produced by Mike Forrester.



Welcome to The Spread – I’m Matt Raebel. The coronavirus has continued to wreak holy heck on everything, and the markets are responding accordingly: by doing their best impressions of this little guy right here. (Holds up Mr. Bill doll) OH NOOOO! Although gold and bitcoin are considered by some to be safe havens in times like these, both recently saw downturns so savage the price of hand sanitizer is becoming worth more than both combined. The CME hit its overnight limit down for futures trading on March 8th, though it continued to trade. Trading on VIX Futures was stalled Monday morning due to liquidity issues. Later this week, the VIX hit its highest level since the crash of ‘08 and has continued to climb. I’d say try not to panic, but clearly that ship has sailed.  Low treasury bond yields in both the U.S. and Europe, not to mention a crude oil crash, had traders practically tripping over each other to hedge, leading to record volumes in derivatives trading. The Singapore Exchange posted Monday that average daily volume for all derivatives trading on the exchange in February was almost one and a quarter million contracts per day. The CME Group posted that it reached a new record for daily volume for energy futures and options, trading 6.8 million contracts on March 9th. While all the big exchanges were trading derivatives contracts like they had the cure for the coronavirus in them, the online brokerage Robinhood went out of commission for the third time in two weeks on Monday. Even maid Marian moved her account. Later in the week, news broke that the firm apparently drew its entire $200 million credit line during the week of February 24th, though Robinhood reps said the brokerage still has plenty of cash on hand. If there’s a fourth outage, not even King John will be able to save them. The CME also announced that it will indefinitely close its trading floor at the end of the week, though electronic trading through its Globex system will still be available. The NYSE and other exchanges are considering similar measures. The OCC named two new members to its board of directors this week – Kevin Kennedy, a senior VP and head of product management for North America at Nasdaq, and Thomas Barrett, who leads multiple clearing services at Goldman Sachs. Definitely a strong couple of additions to the OCC. Speaking of which – the OCC is the new sponsor of The Spread! We’re extremely excited to work with them, and look forward to bringing you the latest news from my new favorite options clearing corporation. That’s gonna do it for me this week. Consider working from home if you can – just try to stay safe. I’ll see you next week. Until then, happy trading.  



Even Gold Takes a Beating as Broad Market Rout Intensifies

Down 26%: Bitcoin Sees Worst Sell-Off in 7 Years as Coronavirus Spurs Flight to Safety CME

Group says U.S. stock futures hit down limit, continue to trade

Trading in VIX options froze after open – CBOE

The stock market’s fear gauge spikes to its highest since the peak of the financial crisis

The Vix Hit Its Highest Level Since the Financial Crisis. That’s a Lot of Fear. VIX

Spikes to Highest Since 2008 in Manic Monday Trading

SGX posts record derivative volumes in February amid coronavirus fears CME

Group Energy Futures and Options Reach All-Time Daily Volume Record of 6.8 Million Contracts

CME to Close Its Trading Floor Amid Coronavirus Outbreak Robinhood

Users Vent on Twitter After New Outage Reported

Robinhood Maxed Out a Credit Line Last Month as Markets Fell

OCC Names Two New Members to Board of Directors

John Lothian Newsletter

Today’s Newsletter

Crypto Nomads: Surfing the World for Risk and Profit

Crypto Nomads: Surfing the World for Risk and Profit

First Read $51,906/$300,000 (17.3%) ++++ Hits & Takes John Lothian & JLN Staff The STA is holding the 88th Annual Market Structure Conference in person on October 6-8 at the JW Marriott in Washington, DC with the title "The Great Return." That is a very good...

We visit more than 100 websites daily for financial news (Would YOU do that?)

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.”

The Spread – July 16, 2021

The Spread – July 16, 2021

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

The Spread – July 9, 2021

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

The Spread – July 2, 2021

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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