US-China Trade War Latest: US Weighs Limits on Portfolio Inflows; Options traders are already trying to game the 2020 election — and it’s happening far earlier than in prior cycles

Sep 27, 2019

Lead Stories

Options traders are already trying to game the 2020 election — and it’s happening far earlier than in prior cycles
Ben Winck – Business Insider
Options traders are already betting that the 2020 US presidential election will roil markets. They expect volatility to arrive earlier than in previous election cycles. Contracts wagering on volatility in 2020 are starting to shift toward a bearish sentiment as traders anticipate the market to drop ahead of the election, according to The Wall Street Journal. The 2016 election cycle saw markets move with little volatility until the final week of the race. The stock market jumped following President Trump’s victory, with the S&P 500 surging more than 6% in the two months after election night.
bit.ly/2nOZ2MB

US-China Trade War Latest: US Weighs Limits on Portfolio Inflows
Bloomberg
Trump administration officials are discussing ways to limit U.S. investors’ portfolio flows into China in a move that would have repercussions for billions of dollars in investment pegged to major indexes, according to people familiar with the internal deliberations, Bloomberg News reports.
/bloom.bg/2nObbBq

Sterling in worst slide since August tumult amid Brexit drama
Philip Georgiadis – Financial Times
The pound is sliding again in the face of continued political deadlock and increasing evidence the uncertainty is wreaking damage on the British economy.
Sterling was on course for its worst week since early August as it fell back below $1.23 on Friday, leaving the currency more than 1.5 per cent lower for the week.
/on.ft.com/2mkJvUu

What does CMEs options announcement mean for the crypto markets?
Reuben Jackson – CryptoSlate
All summer long, the hottest headlines in cryptocurrency have been about derivatives. As the price of BTC started to climb, BitMEX and CME both announced they were experiencing record trading highs on perpetual swaps and cash-settled futures. Binance has now launched not one, but two, futures trading platforms. Most recently, ICE launched physically-settled futures via Bakkt.
bit.ly/2mogW8u

Regulation & Enforcement

US regulator overhauls requirements for launching ETFs; SEC lowers the barriers to entry, hoping to stimulate competition
Chris Flood – FT
The Securities and Exchange Commission, the US markets regulator, has overhauled the rules covering exchange traded funds in a move intended to encourage more providers to enter the fast-growing sector.
/on.ft.com/2m7Qyjo

SEC Charges Three Individuals with Deceiving Main Street Investors Through the Sale of Binary Options
SEC
The Securities and Exchange Commission today charged three foreign individuals, Gil Beserglik, Raz Beserglik and Kai Christian Petersen, with deceiving U.S. investors, including vulnerable retirees, and causing them to lose tens of millions of dollars through fraudulent, online sales of high-risk securities known as binary options.
bit.ly/2m7Rnsw

Strategy

Stay Short Volatility
Seeking Alpha
Over the last few weeks, there have been quite a few volatility shocks seen in the VIX as both trade fears and President Trump’s tweets have pushed market action. In this piece, I will take a step back and examine both seasonal and current trends in the VIX as well as a few specific instruments in the volatility ETP space. It is my belief that investors should look to short volatility in the coming weeks both on an outright basis as well as due to the methodologies of key volatility ETPs.
bit.ly/2mlxwWI

Education

Webinar: Debit Verticals
OCC
We’ll start the simulcast with a talk about option strategies that involve simultaneous sales and purchases of options, initially resulting in a debit. You’ll learn about: The goals of debit verticals Bull call spreads and bear put spreads Position management Register today for session 1.
bit.ly/2mai4gd

Webinar: Taking Advantage of Large Market Moves
OCC
We’ll follow up debit verticals with a presentation on strategies for larger moves in the market. Specifically, we plan to: Review the iron condor Discuss how to build the long (iron) condor Review the iron butterfly Detail how the long (iron) butterfly is constructed Sign up now for session 2.
bit.ly/2nRm05R

Webinar: Three-Way Directional Strategies
OCC
Our simulcast will wrap up with a look at how investors can incorporate multi-option strategies when they have a particular view about the direction of a stock or ETF. In this session, we’ll discuss how to combine simple options strategies into a more complex and aggressive position: Bullish strategies – short put spread with long call Bearish strategies – short call spread with long put Options strike prices selection Register for session 3.
bit.ly/2lJ4gZM

Events

FIA Announces Fintech Startups Chosen for Fifth Annual Innovators Pavilion
FIA
FIA today announced that 20 companies have been chosen to exhibit in the FIA Innovators Pavilion at the 35th Annual Futures and Options Expo, which will take place in Chicago on Oct. 29-31. The FIA Innovators Pavilion gives fintech startups the chance to connect with more than 4,000 people at the largest gathering of derivatives industry professionals in the world. Participants are selected by a panel of industry experts from FIA member firms as well as venture capital companies and other market participants. To date, 72 startups from five countries have participated in this annual showcase.
bit.ly/2lGHTUP

Miscellaneous

Hedge Fund Investors Seek Masters of a Corner of the Universe
Katia Porzecanski and Riley Griffin – Bloomberg
The jacks-of-all-trades should watch out. Hedge fund investors want expert stock-pickers now.
That’s the consensus found in a survey of some 300 investors by Goldman Sachs Group Inc. Industry allocators — including funds of funds, pension funds, consultants, family offices and endowments — pulled $16.4 billion from generalist long-short equity funds in the first half of this year, more than any other strategy, according to data from the bank and Hedge Fund Research Inc.
/bloom.bg/2m9E3Ux

This explosive discovery about stock and bond returns will shake your views on investing
Mark Hulbert – MarketWatch
How would you change your financial planning strategy if you couldn’t count on stocks to outperform bonds? Not just for a year or two, but over your lifetime?
Alarming as that possibility may be, new research suggests you need to take it seriously. Edward McQuarrie, a professor emeritus at the Leavey School of Business at Santa Clara University in California, has painstakingly reconstructed U.S. stock- and bond market returns back to the late 1700s. Except for 40 of the past 220 years — 1942 through 1982 — stocks and bonds have produced essentially equal returns.
/on.mktw.net/2maqlAK

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