Wall Street’s faster trade settlement sees some temporary bumps; Ether Put-Call Ratio Hits One-Year High, Hints at Bullish Bias Despite Pause in Rally

May 30, 2024

Observations & Insight

JJ Kinahan of IG North America Discusses Options Trading and Regulatory Changes
JohnLothianNews.com

ASHEVILLE, N.C. (JLN) – JJ Kinahan, CEO at IG North America, shared his insights on the current state of options trading and regulatory changes in the industry during an interview at the Options Industry Conference with John Lothian News. The interview is part of the JLN Industry Leader video series sponsored by the OCC.

Watch the video »

Lead Stories

Wall Street’s faster trade settlement sees some temporary bumps
Davide Barbuscia and Carolina Mandl – Reuters
The transition to faster trade settlements for securities in the U.S. has faced processing bumps although the switch has mainly been smooth, market participants said on Wednesday. On Tuesday, U.S. trading of equities, corporate and municipal bonds and other securities moved to a one-day settlement cycle (T+1) from two days (T+2), to comply with a rule change adopted in February by the U.S. Securities and Exchange Commission. Canada, Mexico, Argentina and Jamaica implemented T+1 on Monday. The shift in the world’s largest financial market is aimed at making market infrastructure more resilient, but investors and regulators braced for increased trade failures and other hiccups. The Securities Industry and Financial Markets Association (Sifma) said it was optimistic about the progress of the transition.
/jlne.ws/4bH5TuE

Ether Put-Call Ratio Hits One-Year High, Hints at Bullish Bias Despite Pause in Rally; The uptick signals a bullish outlook, according to Wintermute.
Omkar Godbole – CoinDesk
Ether’s (ETH) price rally has stalled since Monday. Still, a popular options market gauge continues to exhibit a bullish bias. The token’s price has pulled back to $3,730 from the two-month high of $3,973 reached Monday, CoinDesk data show. Prices were on a tear last week after the U.S. SEC moved closer to approving the highly-anticipated spot ether exchange-traded funds (ETFs). Ether’s put-call open interest ratio, which compares the number of active put or bearish contracts versus bullish or call options, rose to 0.61 on Deribit early Thursday, the highest in at least a year, according to data source Glassnode.
/jlne.ws/3R9F5Ls

Derivatives Trading in 2024: Opportunities and Data Scalability
FOW
The global Futures and Options market continues to grow exponentially, year on year, in terms of the absolute number and volumes of F&O instruments issued and traded, and especially the explosive growth in trading activity in newer markets. In the APAC region, for example, futures and options (and other derivatives) trading is gaining huge momentum and represents an increasingly large share of the ‘global derivatives wallet’. It is estimated that this region’s trading volumes doubled in 2023, with particularly significant activity in India and China. In India alone, activity on major exchanges including the National Stock Exchange leapt around 80% in equity-related derivative transactions (and around 30% for energy, agriculture and precious metals).
/jlne.ws/4bXrYVB

SpectrAxe fires up OTC FX options Clob; Go-live marks first electronic all-to-all venue for buy-siders trading the instruments
Joe Parsons – FX Markets
SpectrAxe has gone live with the first central limit order book (Clob) to facilitate all-to-all trading for over-the-counter FX options. The venue enables hedge funds to trade anonymously with other hedge funds, proprietary trading firms, regional banks and market-makers via their FX prime broker (FXPB) relationships on a lit marketplace.
/jlne.ws/4c2pPYP

Bitcoin Bulls Face Tough Battle Ahead Of $6.5 Billion Options Expiry Amid High Hopes And External Influences
Crypto Intelligence
Bitcoin investors are known for their bullish outlook, and despite multiple failed attempts to sustain prices above $71,000, derivatives betting on $80,000 and $90,000 continue to rise. This is driven by expectations of high-volatility events such as geopolitical tensions, socio-political changes, U.S. presidential support, and increased corporate adoption of Bitcoin. Bitcoin bulls were overly optimistic, betting on $72,000 or higher Bitcoin’s $6.5 billion options expiry on May 31 is a prime example. Bulls’ failure to break the $70,000 resistance over the past week suggests these optimistic call (buy) options may become worthless.
/jlne.ws/4c19mDY

Revived Hike Chatter Fuels Higher-for-Longer Options Wagers; Positioning in similar-style hawkish SOFR trades has ballooned; Fed’s Kashkari said rate hikes can’t be entirely ruled out
Edward Bolingbroke – Bloomberg
Options traders are piling into bets that the Federal Reserve will keep rates higher for longer as they grow increasingly more hawkish than their counterparts in the swaps market. It’s a wager that began attracting attention in March, when a slew of surprisingly strong readouts on growth and inflation hit. But the bet’s grown substantially since then, reinforced by data earlier this week showing US consumer confidence unexpectedly rose in May. It’s the latest indication that the options market expects the US central bank to stay the course — or even raise rates over the next year.
/jlne.ws/3Vlzbcn

Bullish Nvidia Trade Soars as Day Traders Bet on Leveraged ETFs
Isabelle Lee and Katie Greifeld – Bloomberg
The latest Nvidia Corp. frenzy is fueling an unprecedented rally in the booming industry of leveraged-up ETFs as retail traders go all-in on the world’s “most important stock.” A GraniteShares fund, which gives investors two times the daily return of the Jensen Huang-run company, is now up 450% over the past year, with a record $4.7 billion in trading volume last week. The $2.8 billion GraniteShares 2x Long NVDA Daily ETF (ticker NVDL) launched in December 2022. Nvidia, the posterchild of the artificial intelligence craze, is fueling the bull market to multiple records with the now $2.8 trillion chipmaker posting a fresh blockbuster earnings report as bullish call options boom.
/jlne.ws/4aHcCDu

Exchanges

CME Group Inc. Announces Second-Quarter 2024 Earnings Release, Conference Call
CME Group
CME Group Inc. will announce earnings for the second quarter of 2024 before the markets open on Wednesday, July 24, 2024. Written highlights for the quarter will be posted on the company’s website at 6:00 a.m. Central Time, the same time it provides its earnings press release. The company will also hold an investor conference call that day at 7:30 a.m. Central Time, at which time company executives will take analysts’ questions.
/jlne.ws/3yENMH4

NYSE Sees Opportunity for Traditional Structures in Crypto
Shanny Basar – MarketsMedia
Lynn Martin, president of NYSE Group and chair, ICE fixed income & data services, said the exchange will continue to try to find opportunities to bring traditional structures coupled with crypto assets to the fore as it is aiming to launch cash-settled bitcoin index options. Martin spoke at the Consensus 2024 conference in Austin, Texas on a panel about the convergence of crypto and traditional finance on 29 May.
On that day the New York Stock Exchange, part of Intercontinental Exchange, announced it wants to launch cash-settled index options tracking the CoinDesk Bitcoin Price Index, which it said is the longest-operating spot bitcoin index. Last year ICE Futures Singapore collaborated with CoinDesk Indices to update its bitcoin futures contracts.
/jlne.ws/4e1oDqa

NYSE Would Consider Crypto Trading If Regulatory Picture Were Clearer, President Says at Consensus 2024; NYSE President Lynn Martin is open to offering crypto trading, but the lack of clear regulatory guidance is an obstacle, she says.; U.S. regulatory environment will improve in the next couple years regardless of the election outcome, Tom Farley, the CEO of Bullish and Martin’s predecessor at NYSE, predicted.
Krisztian Sandor – CoinDesk
The New York Stock Exchange would consider offering cryptocurrency trading if the regulatory status of such an expansion by the stock market giant was clearer, the company’s president said. “If there was clear regulatory guidance [in the U.S.], it would be an opportunity to look at,” Lynn Martin said Wednesday during a panel discussion at Consensus 2024 in Austin, Texas. U.S-listed spot bitcoin {{BTC}} exchange-traded funds (ETF) amassing $58 billion of assets is “a strong sign” that there’s demand for regulated crypto products, she added.
/jlne.ws/4bFIZ6L

NYSE to launch cash-settled index options tracking XBX
Rick Steves – Finance Feeds
“As traditional institutions and everyday investors are demonstrating their wide-ranging enthusiasm for the recent approval of spot bitcoin ETFs, the New York Stock Exchange is excited to announce its collaboration with CoinDesk Indices.”
The New York Stock Exchange has partnered with CoinDesk Indices to launch cash-settled index options tracking the CoinDesk Bitcoin Price Index (XBX), the longest-operating spot bitcoin index. NYSE, and its parent company Intercontinental Exchange (ICE), intend to work with CoinDesk Indices and the relevant regulatory agencies to develop specific product offerings.
/jlne.ws/4aC9wRi

New York Stock Exchange to Launch Bitcoin Options Products
Shalini Nagarajan – Cryptonews
The New York Stock Exchange (NYSE) on Wednesday announced its intention to introduce cash-settled spot Bitcoin options, pending regulatory clearance. The new Bitcoin options on the NYSE will track the CoinDesk Bitcoin Price Index (XBX) to determine their value. This index, created by CoinDesk Indices, has been around for a decade and is already used to track over $20b worth of Bitcoin ETFs.
“As traditional institutions and everyday investors are demonstrating their wide-ranging enthusiasm for the recent approval of spot bitcoin ETFs, the New York Stock Exchange is excited to announce its collaboration with CoinDesk Indices,” said Jon Herrick, chief product officer at the NYSE.
/jlne.ws/3VnAtna

Technology

Best Order Management System: Broadridge
Anna Lyudvig – Traders Magazine
Traders Magazine spoke with Shantanu Goyal, Head of Agency Trading, Product Management, Broadridge, who won Best Order Management System at the 2024 Markets Choice Awards.
Please tell us about your OMS and its most important features.
Broadridge’s OMS is a unified, multi-asset trading platform with sophisticated automation and rich workflow functionality fuelling innovation and efficiency in sell side trading. Covering the entire trading lifecycle, our OMS seamlessly supports High Touch, Low Touch, Portfolio Trading, Market Making and Automation, Connectivity and Onboarding Services, along with powerful tools for Compliance and Risk, and an integrated Middle Office.
/jlne.ws/4bQojsC

Best Trading Analytics: Instinet Analytics
Anna Lyudvig – Traders Magazine
Traders Magazine spoke with Shannon Koenig, Executive Director, Head of ITS Analytics at Instinet, who won Best Trading Analytics at the 2024 Markets Choice Awards.
Please tell us about Instinet Analytics and its capabilities.
Instinet’s Analytics suite provides broker neutral data and decision tools for portfolio and single-name trading strategies, from idea generation through post-trade analysis in more than 60 markets with coverage for equities, options, and futures. Clients can access the full analytics suite, or individual modules, from most EMS/OMS platforms, including Instinet’s Newport EMS, or as a stand-alone web interface, raw data exports, or widgets in third-party applications. Our Analytics suite helps traders distill, consolidate, and compare critical data, as well as, provide tools to measure, analyze, and calibrate strategies and tactics across every part of their trading workflow.
/jlne.ws/3x3QRQs

Strategy

Are ETFs useful in portfolios? Asset owners share their views
Hans Poulsen – Asian Investor
Can exchange-traded funds be a useful tool in portfolio construction? Three asset owners and one index specialist shared their views.
/jlne.ws/3wKLYvO

Looking for an Equity Alternative? Consider Covered Call ETFs
Karrie Gordon – ETF Trends
Equity investors must currently contend with soaring valuations, concentration risk, volatility, and more within stocks. As more investors look to alternatives for opportunity, covered call ETFs prove increasingly popular, and for good reason.
Option strategies, once considered too complex and niche for most investors, now enjoy mainstream adoption. Covered call strategies, wherein a fund writes and sells calls on underlying equity holdings, thereby earning income (premium), have grown in popularity over the last decade. Since 2022, when stocks and bonds both underperformed, it’s been a veritable renaissance for covered call ETFs.
/jlne.ws/3X39fnf

Stocks Are Pointing Toward Calm, But Bonds Are A Different Story
Reda Farran, CFA – finimize
The VIX, popularly known as Wall Street’s “fear gauge”, measures the implied volatility of the S&P 500 based on options that expire in the next 30 days. It’s one of the best ways to assess the level of anxiety in the market. A low reading indicates tranquility, whereas a high one indicates panic. And just last week, the VIX fell to 11.9 – its lowest level since November 2019, months before a pandemic would shut economies around the world and spook financial markets.
/jlne.ws/3R6tTPC

Wall Street Starts Calling Time on ESG Labels After Backlash

Wall Street Starts Calling Time on ESG Labels After Backlash

First Read Hits & Takes John Lothian & JLN Staff Miami International Holdings, Inc. (MIH) announced that the SEC has approved MIAX Sapphire LLC's application to become a national securities exchange. MIAX Sapphire, MIH's fourth national securities exchange for...

We visit more than 100 financial news websites daily (Would YOU do that?)

The Spread

Traders Betting on China Easing Boost Bearish Options on Banks

Observations & Insight Miami International Holdings, Inc. (MIH) announced that the SEC has approved MIAX Sapphire LLC's application to become a national securities exchange. MIAX Sapphire, MIH's fourth national securities exchange for U.S. multi-listed options,...

Past Options Newsletters

Options Bulls Come Out to Play

Options Bulls Come Out to Play

Observations & Insight The CME Group recently announced several product modifications and rule violation penalties. Effective August 5, 2024, additional Treasury Invoice Swaps and Spreads will be available, and starting July 22, 2024, there will be amendments to...

Pin It on Pinterest

Share This Story