Think Wall Street’s back to normal? Not so fast, options markets say
April Joyner – Reuters
Options investors are preparing for more volatility ahead despite last month’s sharp rebound in U.S. stocks, reflecting doubts that markets will be quick to return to their former highs in the middle of the coronavirus pandemic. Market turbulence has plunged alongside stocks’ climb since late March, with the Cboe Volatility Index , known as “Wall Street’s fear gauge,” last at 37.19 on Friday after peaking above 80 in mid-March. The S&P 500 .SPX rose 12.7% in April, its biggest monthly percentage gain since 1987, and has climbed more than 27% from its March 23 closing low.
Cboe eyes June 1 reopening of options trading floor in Chicago
John McCrank – Reuters
Cboe Global Markets (CBOE.Z) will be ready to reopen its Cboe options trading floor as of June 1, but the reopening will depend on how safely the exchange operator can do so in the midst of the coronavirus pandemic, Chief Executive Officer Ed Tilly said on Friday.
Exchange operator Cboe profit beats on coronavirus-driven volatility
Abhishek Manikandan and John McCrank – Reuters
Exchange operator Cboe Global Markets Inc (CBOE.Z) beat market expectations for quarterly profit on Friday, earning more from clearing transactions as trading volumes increased due to market volatility during the COVID-19 pandemic.
Rivals Nasdaq (NDAQ.O), Intercontinental Exchange Inc (ICE.N) and CME Group (CME.O) also beat quarterly profit estimates, benefiting from increased market volatility.
Low-Vol ETFs Performed Well — Until They Didn’t. Here’s What Happened, and Why.
Evie Liu – Barron’s
During recent selloffs, including the sharp drops that sent the market into bear territory, “low-volatility” stocks beat the overall market. But no more. Once the initial shock subsided, investors opted for so-called quality stocks, as the Covid-19 pandemic reminds everyone that there’s more to risk than just the size of a stock’s price swings.
Exchanges and Clearing
Cboe Global Markets Reports Record Results for First Quarter 2020
Cboe Global Markets, Inc. (Cboe: CBOE) today reported financial results for the first quarter of 2020. “The first quarter 2020 was defined by tremendous market uncertainty fueled by the COVID-19 pandemic. We took swift action to protect the health of our associates and trading floor community, while maintaining orderly markets to serve our customers and the investing public. As we’ve seen in the past, market participants leveraged the utility of our proprietary products, which neared record trading levels for the quarter, to navigate the market turbulence,” said Edward T. Tilly, Cboe Global Markets Chairman, President and Chief Executive Officer.
CME Globex Notices: April 27, 2020
Regulation & Enforcement
NMS II: Why Proposed Rule Changes May Make Markets Less Fair for All
Phil Mackintosh – Traders Magazine
The middle of a Coronavirus shutdown is probably not the right time to look at reworking the whole U.S. equity market structure. But deadlines are (still, currently) deadlines. Earlier this year the SEC released almost 700 pages of proposed National Market System (NMS) rule changes, as well as denying Cboe’s unprotected lit speed bump before they deferred their decision on IEX’s protected lit speed bump.
Is Now a Good Time to Buy or Sell Stocks? Why Investors May Want to Sell in May.
Nicholas Jasinski – Barron’s
Statistically, owning stocks from Nov. 1 until April 30 of each year and getting out of the market for the other half of the year has been a winning strategy. Since both of their inceptions, the S&P 500 and Dow Jones Industrial Average have each gained an average of about 5% during the November-to-April period, and only 2% from May through October. That historical tendency to underperform has coined the Wall Street adage “sell in May and go away.”
Cheap Volatility: A Lesson In Market Structure Mechanics
Alphacution has always been fascinated by the players. Unlike the world of sport, market players have the potential to influence the field of play, and thus create a feedback loop that influences other players, and so on causing market ecosystem evolution. This is not to suggest that markets don’t have limits. They do. There are always capacity constraints, given performance requirements and performance expectations; and so, we are further fascinated by how players navigate – how they survive, thrive and scale (or not) – relative to the inevitability of market limitations.
Another 3.8 Million Americans Filed for Unemployment Benefits Last Week. The Impact Will Be Lasting, Experts Say.
Lisa Beilfuss – Barron’s
An additional 3.8 million Americans filed for unemployment benefits last week, putting at least 30 million people out of work as the coronavirus crisis ravages the economy.
The Labor Department said Thursday that seasonally adjusted initial jobless claims fell from the previous week’s 4.4 million . That marks the lowest since the first multi-million reading for the week of March 20. Still, the tally remains historically high and suggests about 1 in 5 workers has been laid off in recent weeks. For perspective, jobless claims over the past six weeks are more than five times the worst stretch of the Great Recession.