The stock market might not bottom until the VIX comes down — here’s why the volatility gauge remains stubbornly high
William Watts – MarketWatch
Here’s one reason stock-market investors aren’t convinced the bear-market rout triggered by the global COVID-19 pandemic hasn’t bottomed out: a stubbornly high reading for an index known as the VIX.
A closely watched measure of stock-market volatility often used as a proxy for investor anxiety, the Cboe Volatility Index, typically referred to by its ticker, was lower Monday at 58.74. That puts it on track to break a 10-session streak of closes above 60, a run that’s eclipsed the previous record eight-day stretch in November 2008, in the midst of the financial crisis. The index, which has a long-run average around 20, hit an all-time high earlier this month as stocks plunged deeper into a bear market.
Hedge Demand Shows ‘No Faith in This Rally,’ Credit Suisse Says
Joanna Ossinger – Bloomberg
Investors are using the stock rally to reset hedges rather than chase upside, signaling little conviction in the rebound, according to Credit Suisse Group AG.
The S&P 500 Index is up 17% from its March 23 close, after gaining in four of the last five days. But it’s been a turbulent time for stocks — and indeed, all asset classes — as market gurus and economists struggle to assess the impact of the global coronavirus pandemic. The Cboe Volatility Index, or VIX, ended at 57.08 on Monday and hasn’t closed below 40 since March 5. Compare that with its lifetime average of about 19.2.
Three months that shook global markets
Marc Jones – Reuters
How much damage has the coronavirus and the oil price collapse inflicted on global financial markets this year? Put simply, it has probably been the most destructive sell-off since the Great Depression.
The numbers have been staggering. $12 trillion has been wiped of world stock markets, oil has slumped 60% as Saudi Arabia and Russia have started a price war and emerging markets like Brazil, Mexico and South Africa have seen their currencies plummet more than 20%.
China LPG options make Dalian debut, as futures prices hit limit
Emily Chow – Reuters
China began trading liquefied petroleum gas (LPG) options on the Dalian Commodity Exchange on Tuesday, only a day after the debut of an LPG futures contract, as the bourse experiments with simultaneous launches. Until now, China’s commodities exchanges have listed option contracts on products months or even years after the futures contracts started trading. The LPG futures contract for November delivery fell 9% on Monday, its first day of trade, but rallied 7% on Tuesday to settle at 2,513 yuan per tonne.
Exchanges and Clearing
Equity index options: Extension of non-disclosure limits to index options on DAX, Euro STOXX Banks and SMI
The Management Board of Eurex Deutschland decided with effect from 4 May 2020 to extend non-disclosure limits to index options on DAX, Euro STOXX Banks and SMI.
Regulation & Enforcement
Options Regulatory Alert #2020 – 9 Nasdaq Announces Regulation SCI BC/DR Testing
Nasdaq will host its annual Business Continuity and Disaster Recovery Plan test on Saturday, October 24, 2020. Rule 1004 of Regulation SCI requires that each SCI entity designate certain members/participants, based on standards for designation established by the SCI entity, to take part in an annually scheduled Business Continuity and Disaster Recovery (BC/DR) Plan test.
Itiviti partners with ECS Fin to add SWIFT messaging to NYFIX Matching
Itiviti (press release)
Through this partnership, NYFIX Matching now has the ability to process trade messages with custodians via all networks including SWIFT. Itiviti will be able to notify trade status to customers in real-time and equip them to take immediate action thereby minimizing breaks. “Working with ECS Fin was a logical next step for Itiviti’s post-trade platform, NYFIX Matching,” said Jason Landauer, Head of Network Sales, Itiviti. “With this partnership, NYFIX Matching can now support execution all the way to settlement.” ECS Fin is one of Itiviti’s 60 global partners. This mutually beneficial partnership will enhance the abilities of both parties to offer PREMIER services to their customers and provide an outstanding post-trade experience.
Three Mistakes Every Struggling Trader Makes
Matt Hensley – YouCanTrade
As each new trader enters the markets, they almost inevitably struggle. Some learn to power through the early losses on the way to profitability, others get caught in the same cycle of mistakes and frustrations. Join Coach Matt Hensley as he breaks down some of these mistakes and how to overcome them. From having rules-based setups, to how to evaluate each trade you make, Matt will walk through some of the ways to avoid and correct common thinking errors many beginning traders face.
Date: March 31
Time: 7:00 pm – 8:00 pm
Event Category: Two Roads Trading
Wall Street traders eye huge paydays during coronavirus volatility
Alex Morrell and Dakin Campbell – Business Insider
As a global health crisis raged outside, and markets convulsed and quaked with historically intense volatility, some of Wall Street’s largest trading floors have been uncharacteristically quiet.
At one of New York’s top banks, a trading floor that usually bustled with hundreds of personnel was staffed with less than two-dozen people last week, primarily “essential risk takers,” spread across the vast space and avoiding contact, according to a senior trader who’s continued to report to the bank’s headquarters amid the unfolding novel coronavirus outbreak.
Taleb Says Portfolios to ‘Blow Up’ Without Tail Hedges
Erik Schatzker – Bloomberg
Nassim Taleb, the former options trader who predicted the 2008 financial crisis in his bestseller “The Black Swan,” said investors stung by the coronavirus crisis are paying the price for ignoring the risk of a predictable event.
Taleb also criticized the $2 trillion economic relief package signed into law last week as a bailout for investors and for companies that drained cash or levered up to buy back stock.