The Spread: To The Moon And Back

Suzanne Cosgrove

Suzanne Cosgrove

Editor

 

Transcript:

Welcome to The Spread, I’m Matt Raebel.

You know, when I think about options trading, I don’t really tend to think of Michael Bolton – at least, I didn’t used to. He apparently dropped a new single last week called, “Break Up With Your Brokerage.” Now, before you say anything, you should know that the song seems to be about breaking up with Robinhood specifically, with such classic lines as, “tell me who you sell my trades to.” I’d sing you a sample, but whenever I try to sing in Michael Bolton’s voice, it always comes out sounding like Kermit the Frog. Anyway…

While testifying Tuesday at a confirmation hearing before the Senate Banking Committee, Gary Gensler said one of his focuses as the new head of the SEC will be to address the “gamification” of certain trading apps – not that he mentioned any names – *cough *Robinhood* cough* – excuse me.

While that was going on, stock for Rocket Companies, the parent company of Quicken Loans, shot up like…well, like a rocket Tuesday, hitting an all-time high before tumbling back down, with some calling it “GameStop-esque.”

As was the case with GameStop a few weeks ago, Rocket’s stock was heavily shorted and as such, there was a lot of scuttlebutt about trading the stock on the Reddit community WallStreetBets around the time the stock spiked. I looked into it myself, and I did find a lot of posts about the stock Tuesday. If Gensler really intends to address the changes to the markets caused by traders on apps like Robinhood, he may inevitably have to address activity on online communities like the ones on Reddit.

The OCC announced Tuesday that cleared contract volumes in February 2021 were the second-highest on record, with January 2021 being the highest. The trading boom that started last year is showing no signs of slowing down, and neither is the OCC. Year-to-date average daily cleared contract volume was up more than 61 percent compared with the same time last year, and total exchange-listed options cleared volume increased 47 point four percent compared with February 2020.

I asked Phil Mackintosh, chief economist over at Nasdaq, for his key takeaways from 2020, as well as what to expect from 2021. I turned the interview into a podcast that you can listen to on John Lothian News dot com. We’ve also got a new report by JLN Editor Thom Thompson about policy issues facing the cannabis industry this year. Check those out on our site, John Lothian News dot com. That’s gonna do it for The Spread this week – until next time, stay safe, and happy trading.

 

Sources:

Michael Bolton – Break Up With Your Brokerage | Public.com
YouTube.com
https://jlne.ws/3uTy98s

Gary Gensler Says Scrutinizing Trading Apps Would Be Focus at SEC
Benjamin Bain and Robert Schmidt – Bloomberg
http://jlne.ws/3e33z63

Rocket shares soar more than 70% as analysts eye ‘GameStop-esque’ short squeeze
Sinéad Carew – Reuters
http://jlne.ws/2Oh4Onu

Rocket Stock Is the New Meme Trade. Move Over, GameStop.
Orla McCaffrey – WSJ
http://jlne.ws/3bcG3C1

Rocket Falls as RBC Suggests Reddit-Driven Rally Is Overdone
Paul Jarvis, Suzannah Cavanaugh, and Felice Maranz – Bloomberg
http://jlne.ws/3bcFgRk

(Content warning: language) RKT Megathread for March 2nd, 2021
Reddit – /r/WallStreetBets
https://jlne.ws/2OnGUGW

OCC February 2021 Total Volume Up 45.6 Percent from a Year Ago
OCC
http://jlne.ws/382th75

Cannabis To Face Big Policy Issues In 2021
Thom Thompson – JLN
http://bit.ly/3v0mzYY

Looking Back On 2020 With Phil Mackintosh, Chief Economist At Nasdaq
Matt Raebel – JLN
http://bit.ly/3sW8BWb

John Lothian Newsletter

Today’s Newsletter

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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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