The Spread: The Final Countdown

Suzanne Cosgrove

Suzanne Cosgrove

Editor

This week on The Spread – the VIX hits a 5-month high one week before the U.S. election, FIA Expo goes virtual, and more.

Produced by Mike Forrester.

 

Transcript

Welcome to The Spread, I’m Matt Raebel. Well, it’s almost here – the most anticipated event since the Game of Thrones finale last year. Of course I’m talking about the 2020 United States presidential election which, as we’ve discussed on this show before, is the reason why a lot of folks have been taking options positions around November 3rd since the beginning of the year. This isn’t atypical for an election year, but I think it’s safe to say this has been no ordinary election, and the pandemic certainly hasn’t helped market participants feel more certain about the future; the VIX rose to its highest level since June this week. Time will tell how the election shakes out – meanwhile, if there’s something else we can definitely be sure of besides death and taxes, it’s that FIA’s Expo 2020 is still on. Even a freak snowstorm last year couldn’t stop the event, and this year, the 36th Annual Futures & Options Expo is – you guessed it – totally virtual. The FIA has put together a program full of virtual talks so attendees can stay socially distanced, and just in case you thought they weren’t working hard enough, the FIA also recently published a white paper on the impact of pandemic volatility on CCP margin requirements, which you can read by following the link below this video. A little fintech company by the name of Nordic Capital had some big news for us this week – they’re considering selling the Itiviti Trading Platform, which generates about 200 million euros annually, and some say could fetch a price of as much as a billion dollars. In other words, the money in Itiviti ain’t itty-bitty. ICE is planning on rolling out new SONIA options this December. I actually wasn’t familiar with SONIA before I read this story – I was like, “SONIA, what’s that…an Icelandic pop star?” Turns out, no – it’s an alternative index for sterling derivatives, and ICE Futures Europe will launch options and mid-curve options based on three-month SONIA index futures on December 7 this year – pending regulatory approval, of course. After the tragic passing of Joe Sullivan a couple of weeks ago, this industry has suffered yet another tremendous loss – on October 24th, former Cargill Investor Services executive Peter Christian Wind passed away. He was 70 years old. Peter was a legend in the futures industry, and a friend and mentor to many, including John Lothian. John has written a piece remembering Peter, which you can read by following the link below this video, or by visiting John Lothian News dot com. That’s gonna do it for the Spread this week – stay safe, and happy trading.

 

Sources

Pandemic’s latest spread triggers surge in VIX ‘fear gauge’ for U.S. stocks
April Joyner – Reuters
Wall Street’s “fear gauge” is on track for its biggest weekly jump since March as investors worried about rising U.S. and European coronavirus cases, the lack of fiscal stimulus and uncertainty about the U.S. presidential election outcome.
https://reut.rs/3oBSegg

FIA-V Registration
http://FIA.org/expo

FIA Issues White Paper on the Impact of Pandemic Volatility on CCP Margin Requirements; Paper finds central counterparty (CCP) margin requirements rose dramatically during pandemic; FIA calls for improvements to margin models to reduce liquidity risk
FIA
https://bit.ly/37SYGJU

SONIA options to launch on ICE Futures Europe in December; ICE said open interest in its three month SONIA futures grew to record levels recently as it prepares to launch new SONIA options.
Annabel Smith – The Trade
https://bit.ly/2HEq0AG

Nordic Capital Said to Explore Sale of Itiviti Trading Platform
Jan-Henrik Foerster – Bloomberg
https://bloom.bg/37S6yeH

Remembrances of Peter Wind
John Lothian – JLN
https://bit.ly/37Eyv9P

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...

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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.”

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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