The stock market’s fear gauge spikes 30% to the highest in more than a year as investors’ rush out of equities ‘turns into a stampede’

Jan 24, 2022

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The Cboe Options Institute is holding a 60-minute webinar on Wednesday, Jan. 26 at 12pm EST exploring the topic of “Accelerating Growth in Funds’ Use of Options.” The speakers will be Keith Black, PH.D., CAIA, CFA, FDP managing director and program director, FDP Institute; Joseph Cusick, vice president, portfolio specialist, Calamos Investments; Blair Hull, founder and chairman, Hull Tactical; and Matt Moran, head of index insights, Cboe Global Markets. You can go HERE to register. And look out for coverage of the webinar incorporating an interview with all the panelists, which will be appearing in JLN after the webinar takes place. ~SR

Lead Stories

The stock market’s fear gauge spikes 30% to the highest in more than a year as investors’ rush out of equities ‘turns into a stampede’
Carla Mozée – Markets Insider
The stock market’s so-called “fear gauge” soared to its highest mark in 14 months on Monday while stocks slid before the Federal Reserve kicks off its two-day meeting that is widely expected to signal the imminent tightening of monetary policy.
The Cboe volatility index surged as much as 31.5% to 37.95, the strongest level since November 2020, then pared the gain to 27%.

Options market dip-buyers go missing as stock sell-off worsens
Saqib Iqbal Ahmed – Reuters
Traders in the options market showed little appetite to bet on an end to the continuing stock market sell-off on Monday, as Wall Street’s most followed gauge of equity market fear soared to its highest level in more than a year.
The Cboe Volatility – the Wall Street fear gauge – was recently up 9.14 points to 37.99, its highest since November 2020 as worries over a more hawkish Federal Reserve and a Russian attack on Ukraine put the S&P 500 on course to close down more than 10% from its recent high.
Even as stocks tumbled, however, there were few signs in the options market that traders were expecting the sell-off to abate soon.

Worried Traders in Dash for Stock Liquidity as Selloff Worsens
Lu Wang – Bloomberg
Traders are pouncing on the most liquid instruments in the investing world to navigate the equity market turmoil spurred by the Federal Reserve’s newfound hawkish resolve.
With the S&P 500 extending its selloff from a recent record to more than 10%, trading is spiking across exchange-traded funds from leveraged strategies tracking technology shares to those betting on market volatility.

S&P 500 (SPX) Having Worst Start to Year Ever
Emily Graffeo and Lu Wang – Bloomberg
The stock market has never been down this much 16 trading days into a year.
The S&P 500 has dropped 11% — heading toward what would count as a correction — so far this year. That’s the most on record at this juncture, according to Bloomberg data that goes back over nine decades, though drawdowns have been faster in prior years before quick rebounds, most notably in 2009.

A Decent Year for Hedge Funds Is Still Not Good Enough; Double-digit returns in 2021 still lagged the benchmark U.S. stock index.
Mark Gilbert – Bloomberg
There’s good news and bad news in last year’s hedge fund numbers. While the industry has recovered some of its swagger, its performance continues to suggest that active portfolio managers aren’t living up to their promise to outpace passive returns, even during bouts of market volatility.

Oil Market Runs Out of Bears in Surge to the Brink of $90
Alex Longley – Bloomberg
The oil market is running out of sellers in its surge to almost $90 a barrel.
Whether it’s speculators, traders hedging their barrels in storage tanks or U.S. producers, some of the biggest drivers of bearish price movements have all retreated in recent months.


Greek stock exchange board picks Kontopoulos as new CEO
The board of Hellenic Exchanges (EXCr.AT), the operator of Greece’s stock and equity derivatives markets, picked Yiannos Kontopoulos as its new chief executive to replace outgoing CEO Socrates Lzaridis, the group said on Saturday.

Regulation & Enforcement

SEC Obtains Final Judgment Against Binary Options Affiliate Marketer and Family Members Sharing in His Ill-Gotten Gains
SEC v. Ronald C. Montano, et al., Case No. 6:18-cv-01606-GAP-GJK (Middle District of Florida) (filed September 27, 2018 and amended March 11, 2019).
The Securities and Exchange Commission today announced the entry of a final consent judgment against Ronald C. Montano and Relief Defendants Romeo Montano, Elma Montano, Denise Montano, and REM Florida Properties, LLC to resolve charges related to fraudulently inducing investments in binary options.

SEC Looks to Bolster Market’s Cyber Defenses
Paul Kiernan – WSJ
The Securities and Exchange Commission is exploring ways to improve cybersecurity in capital markets, including by extending compliance obligations to companies that currently don’t have to meet them, Chairman Gary Gensler said Monday.
“The economic cost of cyberattacks is estimated to be at least in the billions, and possibly in the trillions, of dollars,” Mr. Gensler said in a virtual speech to the Northwestern Pritzker School of Law’s annual Securities Regulation Institute conference. “We at the SEC are working to improve the overall cybersecurity posture and resiliency of the financial sector.”


‘Waiting for the perfect moment may not be the best strategy’: 3 things Americans can do right now as stock markets plunge
Jacob Passy – MarketWatch
Americans woke up Monday morning to a stock market in sharp decline.
In many ways, it was a replay of what investors have seen in recent weeks. Last week, the Dow Jones Industrial Average sealed it worst weekly loss since October 2020, while the S&P 500 and Nasdaq Composite recorded their worst weekly downturns since March 2020.

Maneuvering the 2022 Tech Wreck
Barron’s (Video)
As investors search for opportunities following 2022’s massive selloffs, Kate Moore, BlackRock’s head of thematic strategy for global allocation, presents her constructive case for large-cap stocks amid ongoing volatility and uncertainty.


Goldman Sachs, JPMorgan bankers get $15 million bonuses
Lydia Moynihan – NY Post
Top bankers at Goldman Sachs and JPMorgan got bonuses as high as $15 million this week after last year’s flurry of dealmaking — and investors aren’t happy.
Bank stocks fell sharply even with the bumper year for mergers and stock offerings after they reported sharply higher expenses — in large part because of the fat pay packages they’re doling out in a tight labor market.

Bank Executives Discuss Hiring Plans, Compensation for 2022
Reed Alexander, Samantha Stokes, Carter Johnson and Rebecca Ungarino – Business Insider
New years are all about fresh starts, but Wall Street is kicking off 2022 unable to shake a remnant of last year: a talent war that just won’t end.
Questions over how firms plan to handle increasing expenses — a result of inflation in the US rising and many paying up to retain and poach talent — were a key theme on recent earnings calls for top US banks. Executives’ takes: Everything is under control.

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