The Spread: Plenty of Options



This week on The Spread – record-high options trading volumes, new products from Intercontinental Exchange and HKEX, and more.



Welcome to The Spread, I’m Matt Raebel. The election is over, and though the results will be contested by the sitting president, the markets seem to be reacting with cautious optimism. Word also got around Sunday that the pharmaceuticals company Pfizer has made a breakthrough on its vaccine for coronavirus; hopefully I’ll be able to uncross my fingers soon. They’re starting to feel a bit stiff. According to volume reports by Cboe, the CME Group, the OCC, Nasdaq, and others, October options trading and clearing volumes were through the roof – which is too bad; with winter around the corner, they’re gonna have to patch up that hole in the ceiling. Cboe’s ADV in VIX options and Mini-SPX options were both up 35 percent in October from September 2020. Despite October 2020 having one less trading day than October 2019, the exchange had yet another record-high month, and it looks like demand for mini derivatives is still high. The OCC had one of its best Octobers ever this year; total cleared volume for October was up over 41 percent from October 2019, and average daily cleared options contract volume was up more than 46 percent, according to the OCC’s press release. Keeping the trend going, the cryptocurrency derivatives trading platform Deribit also saw record-high options trading volumes in October – mostly in call options. Seems a lot of traders are expecting bitcoin to pay for their mortgages by betting on options with 36 thousand dollar strike prices. A big chunk of that came from a record number of trades between October 29th and 30th – about 47,000 bitcoins worth of volume was traded within that 24-hour period – like Black Friday, but for bitcoin. The Hong Kong Exchange is launching futures and options on the Hang Seng TECH index; futures will launch on November 23, and options will launch January 18, subject to regulatory approval, making them the first exchange-traded derivatives to track the index. ICE announced Monday that the exchange has launched Credit Default Swap Index Options to give its customers in the CDS markets more tools to hedge with; sounds like Christmas came early for them. I also covered a Cboe webinar from mid-October about protecting yourself from market downturns using VIX products. The speakers were Edward Szado, chair of the Department of Finance and associate professor at Providence College, and Joshua Lisser, senior vice president and head of the index strategies team at AllianceBernstein. Check that and the rest of our stuff out at John Lothian News dot com. That’s it for The Spread this week. Stay safe and happy trading.



Stocks hit record highs, crude prices jump, on vaccine progress
Stephen Culp – Reuters

Cboe Global Markets Reports October 2020 Trading Volume

CME Group Reports October 2020 Monthly Market Statistics
PR Newswire

Nasdaq October 2020 Volumes

OCC October 2020 Total Volume Up 41.1 Percent from a Year Ago

Deribit Sees Record Bitcoin Options Volume as Activity in $36K Calls Surge
Omkar Godbole – Coindesk

HKEX to launch futures and options on Hang Seng TECH index
Annabel Smith – Traders Magazine

Intercontinental Exchange Launches Clearing for CDS Options
Traders Magazine

Covering Your Downside – Shielding Against Market Downturns
Matt Raebel – John Lothian News

John Lothian Newsletter

Today’s Newsletter

New derivatives trading system J-GATE3.0 has gone live

New derivatives trading system J-GATE3.0 has gone live

First Read $53,406/$300,000 (17.8%) ++++ Hits & Takes John Lothian & JLN Staff The following nominations were sent by The White House to the U.S. Senate on September 20, 2021: - Rostin Behnam, of Maryland, to be chairman of the Commodity Futures Trading...

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Past The Spread Episodes

CME Buying Cboe? Options News, John’s Take and Term of the Week in The Spread  – August 20, 2021

CME Buying Cboe? Options News, John’s Take and Term of the Week in The Spread – August 20, 2021

— Will CME Group finally buy Cboe Global Markets?; Options volume outpaces exchange-traded derivatives action; Will the Fed taper sooner or later?; Volatility comes back as August options expire;
— John Lothian talks about Cboe sharks, MIAX SPIKES and remembers Philip McBride Johnson;
— Tastytrade’s Jermal Chandler explains why you need to keep a close watch on gamma in the “Term of the Week.”

The Spread – August 13, 2021

The Spread – August 13, 2021

Volatility eases as summer draws to a close and earnings season ends; Treasury and Eurodollar options perk up on inflation worries; John Lothian delivers a tribute to the late Wayne Luthringshausen and talks market structure; Hong Kong Exchanges and Clearing launches new options; Two economics professors take a poke at stock market bubbles; and tastytrade’s Jermal Chandler talks about theta in the “Term of the Week.”

The Spread – August 6, 2021

The Spread – August 6, 2021

Robinhood shares get an options boost; July options volume up more than 29%; John Lothian says exchange competition is heating up; The Delta variant and volatility; Bullish bets in bitcoin and ether options; And tastytrade’s Jermal Chandler goes back to the basics with calls and puts in the Term of the Week.

The Spread – July 30, 2021

The Spread – July 30, 2021

Earnings season in full bloom; Options lead year-to-date derivatives volume; Robinhood’s IPO; John gets real with Get Real VR: Conflicting factors underpin volatility; Cboe cleared for fall European competition; and the Cboe Options Institute’s Kevin Davitt talks about vega in this week’s “Term of the Week.”

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