Vanguard Joins the Crowd, Cutting Trading Commissions to Zero; Options Volumes Thin After Record Year

Jan 2, 2020

Lead Stories

Vanguard Joins the Crowd, Cutting Trading Commissions to Zero
Daren Fonda – Barron’s
As Barron’s reported on Friday, Vanguard has joined other brokers in eliminating trading commissions. The fund giant said Thursday morning that it is taking commissions to zero for all online stock and option trades, though options transactions will still cost $1 per contract. Exchange-traded funds were already available commission-free at Vanguard.

Options Volumes Thin After Record Year
Gunjan Banerji – The Wall Street Journal
Traders have stepped back from trading options at last year’s frenzied pace. Options volumes have thinned this year as stock volatility has receded, following a blockbuster year for volumes in 2018. With just one full trading day left in 2019, average daily options volumes are hovering at about 19.4 million contracts this year, Options Clearing Corp. data show. That’s about 5% below the record hit in 2018, though higher than levels seen in prior years.

OCC Clears Over 4.9 Billion Contracts in 2019 – Second Highest Ever Annual Cleared Volume December Volume Down 4.2 Percent from Record-Breaking 2018
Press Release via Mondovisione
OCC, the world’s largest equity derivatives clearing organization, announced today that 2019 total cleared contract volume was 4,976,978,704 contracts, the industry’s second-highest ever annual volume, down 5.1 percent compared to 2018’s record-breaking pace of 5.24 billion contracts. Average daily cleared contract volume in 2019 was 19,749,915 contracts. OCC’s December 2019 total cleared contract volume reached 418,410,240 contracts, down 4.2 percent compared to last December.

China to trial interest rate options trading on Feb.24
Winni Zhou and Reuters’ Beijing Monitoring Desk – Reuters
China will trial trading in interest rate options from Feb. 24, the country’s foreign exchange trading platform said on Thursday. The platform, the National Interbank Funding Center, is overseen by the central bank. It said the aim of the pilot was to enable the interbank interest rate derivative market to play a better role in supporting the real economy, meet investors’ interest rate risk management demands and improve interest rate pricing mechanisms, according to a statement on its website.

Bet on Drops in ‘Stretched’ Nasdaq, Credit ETFs, BTIG Says
Joanna Ossinger – Bloomberg
Technology stocks and investment-grade corporate bonds look particularly extended and investors can position via options for potential reversals in both asset classes, according to Btig LLC. “The tech stock/Nasdaq centered rally appears stretched as the Nasdaq VIX made a new yearly low in December, diverging from the S&P 500 VIX,” which didn’t breach lows from April and November, Btig strategist Julian Emanuel wrote in a note Jan. 1. The Cboe NDX Volatility Index reached its lowest closing level since January 2018 last month.

OKEx Launches Bitcoin Options Trades for Select Clients Ahead of January Launch
Marie Huillet – Cointelegraph
Malta-based cryptocurrency exchange OKEx has launched Bitcoin (BTC) options trading for a select group of traders ahead of a public launch in January 2020. In a press release shared with Cointelegraph on Dec. 26, the exchange — currently ranked third-largest by daily trading volume globally — has indicated that the new contract will be settled daily in Bitcoin (BTC).

Expect a Correction, Bigger Swings, and a Late Stock Rally in 2020, Wells Fargo Says
Lisa Beilfuss – Barron’s
At a time when top-10 lists abound, equity strategists at Wells Fargo have laid out their predictions for 2020. From top to bottom, here’s their rundown.

Exchanges and Clearing

Defining the Decade: Ten Years of Growth
Cboe blog
While the managing editor of the Farmers’ Almanac states that the new decade actually starts in 2021, we were feeling nostalgic as we say goodbye to our teenage years and head into 2020. Sure, we’ve got one more year to go, but we wanted to share some interesting trends we found over the past 10 years. Marked by unprecedented growth, the 2010s experienced the longest U.S. bull market in history and was the first 10-year span in at least 170 years that did not experience a recession in the U.S. As we ring in a new year, here are some of the greatest examples of growth in the 2010s.

CME Globex Notices: December 30, 2019
CME Group

Regulation & Enforcement

SR-NASDAQ-2019-100 Notice & Approval
A proposal to amend Options 3, Section 3 Minimum Increments


Fintech pros think the trend of rebundling financial services will continue in 2020
Lea Nonninger – Business Insider
We saw the rebundling of financial services come under the spotlight throughout 2019, and we’ll likely continue to see this trend next year. “With lower barriers on the infrastructure side for fintechs, it’s becoming easier to launch other features that aren’t core to a company’s mandate,” Jillian Williams, investment principal at VC and advisory firm Anthemis, replied to Business Insider Intelligence’s recent survey about fintech predictions for 2020.


Some Traders Are Betting That the Market Will Tumble Soon. Here’s What You Need to Know.
Steven M. Sears – Barron’s
When you feel most comfortable is when you should feel the most uncomfortable. Some institutional investors are starting to feel very uncomfortable—and it may be time to follow their lead. Maintaining a healthy skepticism toward markets and market narratives is largely how shrewd investors catch big turns and avoid the deadfalls that harm others. Yet it is increasingly hard to be a contrarian. Anyone who has analyzed too much and doubted this historic stock rally is ending the decade poorer than tyros who think less and invest more.

Investors Are Preparing for an Economic Slowdown. Here’s How to Profit From the Market’s Fears.
Steven M. Sears – Barron’s
The Grateful Dead put it best: What a long, strange trip it’s been. Despite major, myriad risks to the bullish narrative, including President Donald Trump’s impeachment proceedings and the on-again, off-again trade war with China, the equity market advanced to historic highs in 2019. Even now, bearish concerns are so widespread that it’s hard to discuss stocks without someone citing a novella’s worth of reasons why the market is more likely to fall than rise from these lofty heights.


Back at Work and Stressed? Cute Baby Animal Photos May Help.
Michael M. Phillips – The Wall Street Journal
On a cuteness scale of zero to 100, where zero is “not cute at all” and 100 is “the cutest thing I have EVER seen,” raters gave the fluffy white puppy with black eyes and button nose a respectable 82.70. Not as cute as the gray kitten up on her hind legs, seemingly in prayer (84.82). A far sight cuter than the white rabbit with flashbulb-red eyes (64.46).

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Past Options Newsletters

The Spread – July 30, 2021

The Spread – July 30, 2021

Earnings season in full bloom; Options lead year-to-date derivatives volume; Robinhood’s IPO; John gets real with Get Real VR: Conflicting factors underpin volatility; Cboe cleared for fall European competition; and the Cboe Options Institute’s Kevin Davitt talks about vega in this week’s “Term of the Week.”

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