The Spread: Radio Killed the Video Star

 

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This week on The Spread – election volatility makes options more expensive, the CME has a COVID scare, and more.

 

Transcript

Welcome to The Spread, brought to you by the Options Clearing Corporation. I’m Matt Raebel. Surprised that there’s no video portion of this episode? Well, we figured we’d try something a little different this week. Speaking of surprises – it’s officially October, which means it’s the start of the Fear Month. Lately the upcoming U.S. elections this November have everyone biting their nails even more than the coronavirus, and if you watched the same debate that I did Tuesday night, I wouldn’t blame you. Analysts are still betting on greater than average volatility – even for an election year – around the U.S. elections this November, and options to hedge around the election are getting to be more expensive than a new pair of Yeezys…and it certainly doesn’t help that the Commander in Chief tested positive for coronavirus, which was announced Friday and caused a dip in indices across the stock market. The CME had a big scare this week as a positive COVID-19 case was reported by someone who had been in the eurodollar options pit in Chicago as recently as that previous Friday. The CME issued a memorandum that said the pit had been disinfected twice and would remain open – personally, it’d take more than a thick layer of Lysol and a prohibition on fist-bumps to get me back in there. A lot of people at JPMorgan Chase are probably having a rough week as well. The financial services giant agreed to pay the U.S. government 920 million dollars in fines and disgorgement charges over a major spoofing case, which is one of the biggest bills ever to be laid at the feet of anyone in U.S. history – I mean, I’ve never had a meal at Alinea, so maybe I’m way off. JLN Editor Thom Thompson covered the story, which you can read on our site, John Lothian News dot com. MIAX PEARL, which is the first equities exchange under the MIAX umbrella, completed its first day of trading this week. Tom Gallagher, CEO and chairman of MIAX’s holding company, Miami International Holdings, said the exchange ran cleanly with no functional or operational issues. The National Bureau of Economic Research published a report this week giving their take on the types of portfolio the average Robinhood user keeps. Far from the drastic do-or-die attitude espoused by certain trading communities on Reddit (to use a completely random example), the report found the average portfolio of users on the platform, who tend to be younger traders of the millennial and Gen Z persuasion, have most of their stakes in large, highly liquid firms. Turns out, we’re just as boring as everyone else. The Tokyo Stock Exchange had a bit of a meltdown this week, halting the entire trading day for the first time since 1999. The exchange said there was no sign that it was due to a cyberattack, and apologized to market participants for the inconvenience, vowing that trading would resume as normal Friday and that a full report would follow. Now that’s what I call class. And finally, our sponsors at the OCC today announced that in addition to once again breaking their previous records with their September 2020 volumes, they’ve officially broken the annual cleared contract volume record of 5.24 billion contracts cleared, by clearing over 5.45 billion contracts as of last month. Congratulations to the OCC, and keep up the great work. We’ve got new content on JLN dot com, including new podcasts by me and JLN Editor Suzanne Cosgrove, as well as a new video from John. Be sure to check them out, and we’ll catch you next week on The Spread. Until then, happy trading.

 

Sources:

Fears of a disputed US election fuel market volatility bets
Robin Wigglesworth and Eric Platt – Financial Times
https://on.ft.com/33anIBy

U.S. presidential debate reinforces election fears in options markets
April Joyner – Reuters
https://reut.rs/36gNDJL

Global shares and oil hammered after Trump tests positive for COVID-19, sparking safe-haven rush
Amanda Cooper – Markets Insider
https://jlne.ws/2HO3o0t

Trump’s Positive Covid Test Is Another Reason for Investors to Look Away
Jon Sindreu – WSJ
https://jlne.ws/34mKHZx

CME Notifies Traders of Virus Case in Eurodollar Options Pit
Elizabeth Stanton and Alyce Andres – Bloomberg
https://bloom.bg/3jfs4wQ

JPMorgan: “tens of thousands of episodes of unlawful trading”
Government Settles Complaint Against Banking Giant For Almost $1 Billion
Thom Thompson – John Lothian News
https://bit.ly/36lkld6

MIAX PEARL Equities Completes First Day of Live Trading
Miami International Holdings
https://bit.ly/36frwU2

Robinhood Users Weren’t as Reckless as Portrayed During Rally
Sarah Ponczek – Bloomberg
https://bloom.bg/3ieCGLa

Tokyo Stock Exchange Trading Is Halted by System Problem; Shutdown blocks all trades for full day, in worst case since current system started in 1999
Suryatapa Bhattacharya and Kosaku Narioka – WSJ
https://jlne.ws/33o7sgx

John Lothian Newsletter

Today’s Newsletter

London Stock Exchange to abandon lossmaking derivatives venture

London Stock Exchange to abandon lossmaking derivatives venture

First Read $53,406/$300,000 (17.8%) ++++ Hits & Takes John Lothian & JLN Staff The London Stock Exchange has given notice that CurveGlobal is to be closed effective Friday, the 28th of January, 2022. CurveGlobal's CEO Andy Ross had this to say on LinkedIn...

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

Past The Spread Episodes

GameStop disappoints; Coinbase gets into it with the SEC; Cboe offers Europe options; MIAX Spikes a record; John’s Take on CBOE’s Phil Slocum’s passing and a great moment in options history; and how to execute a strangle  — The Spread — September 10, 2021

GameStop disappoints; Coinbase gets into it with the SEC; Cboe offers Europe options; MIAX Spikes a record; John’s Take on CBOE’s Phil Slocum’s passing and a great moment in options history; and how to execute a strangle — The Spread — September 10, 2021

– Options markets get ready for fall’s chill as equity prices consolidate; Another perspective on small investors;
– John’s Take pays homage to an options veteran and looks at a moment in options market history;
– Pros and cons of using options strangles with Jermal Chandler in the Term of the Week.

Options Traders Brace for Fall; OCC Sets Record; John’s Take on Financial Journalists; Straddling Uncertainty – The Spread – September 3, 2021

Options Traders Brace for Fall; OCC Sets Record; John’s Take on Financial Journalists; Straddling Uncertainty – The Spread – September 3, 2021

In this week’s options news: Delta variant dents U.S. jobs data; Will fall bring a further equity market correction?; Options volume robust despite dog days of August; Cboe and Nasdaq post near tie for most options traded; A tribute to a departing crypto journalist in John’s Take; and Jermal Chandler explores the use case for straddles in the options “Term of the Week.”

Fed’s Powell Takes Center Stage; New Company Offers Options Solutions; Explaining Volatility Skew – The Spread – August 27, 2021

Fed’s Powell Takes Center Stage; New Company Offers Options Solutions; Explaining Volatility Skew – The Spread – August 27, 2021

In this week’s options news, the Fed’s Jackson Hole pronouncements placate the markets; meme stocks take off on a lark; volatility skew rises as traders remain divided; bitcoin and ethereum options hunker down ahead of expiration and Eurex plans to launch a first; John’s Take looks at a new options business with seasoned players; And Jermal Chandler kicks off this week’s options “Term of the Week” with the important concept of volatility skew.

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