Observations & Insight
The Spread: Always Bet on Bull
This week on The Spread: bullish bets abound despite coronavirus concerns, Cboe creates a cushion and casts chats at two conferences, volume of MIAX’s SPIKES options spike, and more.
The stock market’s fear gauge spikes to its highest since August as the coronavirus outbreak rages
Carmen Reinicke – Markets Insider
As investors around the world fear a coronavirus pandemic, volatility is roiling global markets.
The Cboe Volatility Index, or VIX, spiked as much as 40% in early trading Monday to its highest level since August. The index is often referred to as the S&P 500’s “fear gauge” because it tends to spike during periods of worry and uncertainty in the market.
****JB: See also the Reuter’s story, Pandemic fears grip Wall Street, Dow dives 800 points.
European shares suffer worst day since 2016 as virus spreads, Wall Street opens ugly
Marc Jones – Reuters
European shares suffered their biggest slump since mid-2016 on Monday and oil plunged almost 5%, as a jump in coronavirus cases in Italy, South Korea, Japan and Iran sent investors scrambling to the security of gold and government bonds.
Gold Jumps to Fresh Seven-Year High as Investors Flee Riskier Markets
Amrith Ramkumar – WSJ
Investors rushed into gold Monday, sending the price of the precious metal to a fresh seven-year high, as rising fear about the economic impact of the coronavirus epidemic spurred selling across global financial markets.
Ethereum Options volume spikes on Deribit; Open Interest maintains stagnancy
Chayanika Deka – AMB Crypto
Ethereum’s price has maintained a consistent uptrend since the start of the year. The coin that was trading at a low of $132.1 on 1 January has since posted YTD gains of 102.84% and was priced at $267.9, at press time, after a minor correction. As its bullish momentum remained intact, Ethereum Options on the Panama-based cryptocurrency derivatives exchange Deribit also witnessed a spike in volume to $6.5 million on 24 February. Additionally, the volume is expected to increase over the day. According to the latest chart from the cryptocurrency derivative analytics firm Skew Markets, Ethereum Options volume stood at $2.2 million the previous day.
Oil funds’ first wave of virus-selling loses momentum
John Kemp – Reuters
Hedge funds again sold petroleum last week as fears about a coronavirus-driven recession intensified, but the rate of sales decelerated for the third week running.
The slowing rate of sales indicated the wave of long liquidation and short-selling might have been nearing a conclusion, until further evidence of coronavirus transmission outside China emerged later in the week.
Exchanges and Clearing
Record 1 Billion Options Traded at CME Group in 2019
Derek Sammann via LinkedIn
What do CME Group options on futures have in common with the blades of grass on two and a half football fields, or the chicken wings consumed by Americans during the big game each year? The number 1 billion. During 2019, total options volume at CME Group surpassed 1 billion total contracts traded for the first time. That’s an average of more than 4 million contracts traded each day across every investible asset class. And, 2019 marked the seventh consecutive year of year-over-year average daily volume (ADV) growth, making CME Group one of the largest and fastest-growing multi-asset class options exchanges globally.
Regulation & Enforcement
SEC rejects Cboe’s speed bump proposal
Brian Croce – Pensions & Investments
The Securities and Exchange Commission rejected a proposal from Cboe Global Markets to introduce a speed bump in the U.S. equities markets. Cboe’s proposal, filed in June, called for introducing a “liquidity provider protection” feature, known as LP2, on its Cboe EDGA Equities Exchange to enhance liquidity. Under the proposal, once a liquidity-taking order reaches EDGA it would wait four milliseconds before trading with resting orders on the order book, enabling liquidity providers to take more risk and quote tighter spreads, with time to reprice resting orders before opportunistic traders can trade at stale prices, according to the Cboe proposal.
Proposal to assume operational responsibility for certain enforcement functions currently performed by FINRA under the Exchanges authority and supervision