Observations & Insight
Options Adoption: Growth Potential in the Advisory Space
In this JLN video, Emily Sweet, senior analyst with Cerulli Associates, goes through some key findings from a study the firm conducted titled “How Financial Advisors Use and Think About Exchange-listed Options.”
The study, sponsored by the Options Industry Council, surveyed 600-plus financial advisors who both use and do not use options on behalf of clients.
Read the rest and watch the video »
VIX Hedging and College Sports
Matt Levine Bloomberg
We talked on Wednesday about the CBOE Volatility Index, the VIX, which is an index of implied volatility based on S&P 500 Index stock options. The VIX is used as the reference for VIX futures and options, and we discussed a paper by John Griffin and Amin Shams of the University of Texas arguing that a monthly auction for the S&P 500 options is manipulated to influence the price of the VIX and the settlement prices of VIX derivatives.
Convergex’s CEO Noll to Leave Firm
John D’Antona Jr. – Traders News
The chief executive officer of Convergex, Eric Noll, is leaving the firm. Traders Magazine has confirmed with the New York-based agency brokerage and technology company that Noll, who had overseen the acquisition of his firm to Cowen & Co, will be leaving the firm when the deal closes, which could be as soon as next week.
China Considers Changing Yuan Fixing Formula to Curb Swings
China is considering changes to the way it calculates the yuan’s daily reference rate against the dollar, a move that’s likely to reduce exchange-rate volatility while undermining efforts to increase the role of market forces in Asia’s largest economy.
Clarification on Akuna Tax Break
Themis Trading Blog
We received a call from John Harris, COO of Akuna Capital about today’s blog post and would like to issue a clarification. John informed us that the tax break that Akuna received from the state of Illinois was not $4.5m as we had written in our piece. The tax credit actually amounts to 3.75% (the Illinois state tax rate) of any new employee’s salary above 85 employees. John told us that Akuna had received less than $150,000 last year from the EDGE tax credit program which is nowhere need the amount of $4.5m that Illinois Policy first reported. The actual credit per job was around 1% of the $450,000 per job suggested.
Hurdling Options Obstacles: OptionsPlay Finds Advisors Need as Much Help as Retail Investors
Spencer Doar – JLN
When trading options, the options chain is both an advertisement and entry point for the retail investor. But for an options novice, a chart of prices for puts and calls is not the most clear or engaging means of joining the fray. Founded in 2012, OptionsPlay has some 70,000 users and aims to remove the clutter and noise from trading options with straightforward explanations, strategy visualizations, strategy recommendations and technical data and analysis. What founder Mark Engelhardt and crew didn’t realize when they started the firm was that it’s not only retail traders who needed an assist— financial advisors were desperate for tools to help adopt and implement options trading, too.
****SD: In case you missed it yesterday.
Understanding volatility and VIX
David Stein – Standard Journal
Ten years ago Nassim Nicholas Taleb published a book that changed my life. It was titled “The Black Swan: The Impact of the Highly Improbable.”
****SD: I included this primarily because I was surprised it came from a community Idaho newspaper. But hey, I guess everybody cares about volatility?
Exchanges and Clearing
Record WTI Weekly Options Trading around OPEC
From CME Group via Email
Yesterday, the CME “reached a new single-day volume record in WTI Weekly options with 12,129 contracts traded, surpassing the previous volume record of 8,429 set earlier this year” and also set a “single-day [open interest] record of 17,106 contracts with the majority of OI accumulating in the upside calls from $51.00-$53.00.”
London Stock Exchange boss fires EU politicians euro clearing warning: “You protect, you fragment, you isolate, you stall”
William Turvill – City AM
London Stock Exchange boss Xavier Rolet has warned of the damage the EU would inflict on itself if it makes a grab for the City’s lucrative euro clearing market.
Why quants don’t (always) want to work for banks
Sarah Butcher – eFinancialCareers
Chung (a pseudonym) is leaving Goldman Sachs’ strats team. After several years with the firm, he’s had enough. He’s going to try his luck with a hedge fund, or a fintech. Anything but a bank.
****SD: Not enough billiards and who wants a strict dress code?
Equinix: Optimizing multicloud interconnection at the digital edge
IT infrastructures can no longer keep pace with the rate of change in today’s business environment. For most organizations, the only way to stay competitive is to take full advantage of the cloud, with its fast ramp-up, flexibility, scalability and agility benefits.
Wall Street to CEOs: The Future Is Now
Christopher Mims – WSJ
Investors and boards long obsessed with quarterly profits are now hunting for leaders to make big, fast bets to fend off upstarts shooting for the moon
****SD: Can we ban “the future is now” as a phrase?
Amazon’s Brush With $1,000 Signals the Death of the Stock Split
Erik Holm and Ben Eisen – WSJ
Big companies are giving up on the stock split. On Thursday, shares of Amazon.com Inc. almost brushed $1,000 before closing at $993.38. The price increase, up from around $68 a decade ago, reflects the company’s growth and dominance. But it also marks the latest example of a company letting its stock price rise without engaging in a “split” that boosts the number of shares in order to lower the per-share price. Google parent Alphabet Inc.’s Class A shares also are now close to $1,000.
****SD: And it makes options less approachable for the retail customers — but also more appealing than buying the stock, I suppose…