Observations & Insight
Cboe Betting U.S.-Style Equity Derivatives Trade, Clearing Translates to Europe
By Suzanne Cosgrove – John Lothian News
Cboe Global Markets executives on Thursday touted its European clearinghouse acquisition, announced July 1, saying the exchange holding company aims to unlock the potential of pan-European derivatives business.
In a call with investors and analysts, Edward Tilly, Cboe president and CEO, said the deal with EuroCCP marked “a major milestone” for the company. “Ownership of a leading European clearinghouse not only enhances Cboe’s European equity business, but also provides opportunity to diversify our business into trading and clearing derivatives,” Tilly said.
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The VIX Is Still Flashing Warnings for Stock Bulls on a Rampage
Yakob Peterseil – Bloomberg
Fear is still rife across volatility markets even as greed powers U.S. stocks anew after their best quarter since 1998, in a historic divergence making life harder for Wall Street speculators.
While the S&P 500 Index has rallied a whopping 40% from the March trough, a measure of implied equity swings known as the Cboe Volatility Index remains elevated at around double its February low.
JPMorgan Says Giant Volatility Product May Rise From the Ashes
Yakob Peterseil – Bloomberg
One of the world’s largest exchange-traded volatility products has barely exited the stage and already there’s talk of a comeback.
After the delisting of the VelocityShares Daily 2x VIX Short Term ETN, ticker TVIX, strategists at JPMorgan Chase & Co. reckon the firm behind the $1 billion note could team up with a fresh issuer to launch a copycat.
J.P. Morgan launches two actively managed equity ETFs — what you need to know
Lizzy Gurdus – CNBC
Active management is back in action. J.P. Morgan Asset Management recently launched two new actively managed stock-based exchange-traded funds, a sign that issuers are looking to profit from more out-of-the-box strategies as the market grapples with unprecedented volatility. Launched on May 21, the JPMorgan Equity Premium Income ETF (JEPI) and JPMorgan International Growth ETF (JIG) represent ways of “delivering the best of J.P. Morgan through the technology, the benefit-rich vehicle, of the ETF,” Bryon Lake, head of Americas ETF distribution at J.P. Morgan Asset Management, told CNBC’s “ETF Edge” on Monday.
Exchanges and Clearing
OCC Implements Phase III of Financial Safeguards Framework
Enhancing its resiliency as a Systemically Important Financial Market Utility (SIFMU), OCC, the world’s largest equity derivatives clearing organization, today announced that the U.S. Securities and Exchange Commission (SEC) approved Phase III of the company’s Financial Safeguards Framework (FSF) for liquidity on June 4, 2020. The approved changes were implemented on June 29, 2020.
London Stock Exchange’s FTSE Russell joins Libor replacement race
Huw Jones – Reuters
London Stock Exchange (LSE.L) index compiler FTSE Russell began publishing forward-looking interest rates on Monday, entering a four-way race for a new market opened up by the scrapping of Libor next year.
Regulators want the London Interbank Offered Rate or Libor, which banks were fined for trying to rig, replaced with the Bank of England’s Sonia rate for sterling denominated swaps, loans and futures by the end of 2021.
Miami International Holdings Reports June 2020 Trading Results and New Volume and Market Share Records for MIAX Exchange Group
Miami International Holdings, Inc. (MIH) today reported June 2020 trading results for its three fully electronic options exchanges – MIAX, MIAX PEARL and MIAX Emerald (together, the MIAX Exchange Group). The MIAX Exchange Group collectively executed over 82 million equity option contracts in June for a combined average daily volume (ADV) of 3,728,639 contracts, representing a total U.S. equity options market share of 12.60%.
Trading Alert – Effective July 6, 2020 through July 10, 2020, MIAX Options and MIAX Emerald 2X Opening and Intraday Valid and Priority Quote Spread Relief in All Symbols
Subject Summary: Please be advised, effective July 6, 2020 through July 10, 2020, the MIAX Regulation Department has granted 2 times opening and intraday quote parameter relief for all symbols on MIAX Options and MIAX Emerald
Cboe Global Markets Reports June 2020 Trading Volume
Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, today reported June monthly trading volume. The data sheet “Cboe Global Markets Monthly Volume & RPC/Net Revenue Capture Report” contains an overview of June and year-to-date trading statistics and market share by business segment, volume in select index products, and RPC, which is reported on a one-month lag, across business lines. In addition, a supplemental data sheet which provides electronic trading statistics for Cboe Options Exchange is also available on the website.
Euronext announces volumes for June 2020
Calling on Covered Calls for Added Income
Tom Lydon – ETF Trends
The Nationwide Risk-Managed Income ETF (NYSEArca: NUSI) takes on the leg work of writing covered calls for investors, an important trait at a time when the income offered by this options strategy is increasingly important. NUSI is an actively managed portfolio of stocks included in the Nasdaq-100 Index and an options collar. Per index rules, the fund only invests in the top 100 largest by market cap, nonfinancial stocks listed on NASDAQ. A collar strategy involves selling or writing call options and buying put options, thus generating income to hedge some downside risk. The strategy seeks to generate high current income monthly from any dividends received from the underlying stock and the option premiums retained.
2020 Educational Series: Essential Theory
The Options Industry Council continues its 2020 educational series in the third quarter with another set of webinars focused on the benefits, risks and many uses of exchange-listed equity options. For the upcoming quarter, the theme is Essential Theory – and essential is the key word. Over the course of five webinars from July into September, OIC and our guest speakers will cover critical topics for anyone who is going to invest with options, from pricing models and dividend effects to put-call parity and volatility skew. Throughout the quarter, current and former market professionals will lead remote, live sessions geared toward making sure you understand what goes into pricing options, whether it’s a single call position or a multi-leg condor.
The Benefits of Calling Yourself a ‘Trader’ for Tax Purposes; Filing for trader taxpayer status can save a lot of money—but it may not be a designation that’s easy to get
Nick Ravo – WSJ
Today’s neophyte day-traders make plenty of newbie errors, such as buying bankrupt companies or miles-out-of-the-money equity options. Many also aren’t aware of a certain tax-filing strategy that can save them a lot of money.
Trump claims a Joe Biden presidency would cause stock gains to ‘disintegrate and disappear,’ but JPMorgan says it could actually boost the market
Joseph Zeballos-Roig – Markets Insider
Might a Joe Biden presidency send the stock market into a nosedive and end months of steady gains? President Donald Trump appears to think so.
On Monday, Trump tweeted that if Biden wins the presidential election in November, stocks and 401ks would “disintegrate and disappear.”