Wall Street’s Hottest Lottery Ticket: Zero-Dated Options

Jun 28, 2024

Observations & Insight

Complete Interview: David Prosperi; How to Be Successful in the Options Industry
JohnLothianNews.com

In this full interview, Alex talks to longtime financial industry executive David Prosperi. David opens up about how he was able to be successful working on the public relations side of the industry and discusses the career experiences he learned from the most. He finishes the interview by giving advice to those looking to start a career in the options industry and talking about his time in the Reagan White House.

Watch the video »

Lead Stories

Wall Street’s Hottest Lottery Ticket: Zero-Dated Options; Bets on market moves have taken off with these options. Stocks like Nvidia and Apple could be next.
Paul R. La Monica – The Wall Street Journal
Jin Wang has taken some wild rides as a day trader. A software product manager in Houston, he says he turned $26,200 into $73,000 one day in November 2022. On another day, he lost $20,000.
/jlne.ws/4cJpxX9

New era of stock supremacy turns tail-risk hedging upside down
Lu Wang – Bloomberg
Just months after the pandemic broke out, Dennis Davitt was busy pitching his bearish investment fund to panic-stricken clients prepping for the next market crash. These days though, the former Credit Suisse derivatives chief is on a different capital-raising mission altogether: Selling amped-up bullish options strategies to institutional investors fearful of missing out on the next stock boom. “It’s primarily client-driven,” said Davitt, who heads up Millbank Dartmoor Portsmouth, a volatility firm in Asheville, North Carolina. “Their worry is – as the market continues to move forward as it has been – all the performance in the investing universe is going to be coming from public equities. My feeling is nobody owns enough of them.”
/jlne.ws/4cJuKyd

T+1 to increase costs and volumes in ETF securities lending; Industry observers are expecting stock lending to increase in the short term as managers seek to cover short positions
Vibeka Mair – Financial Times
Exchange traded fund providers face additional costs in their securities lending activity due to the US moving its settlement cycle to T+1 at the same time as industry observers expect stock lending to increase. The US, Canada and Mexico moved to a shortened settlement cycle at the end of May for US equities and corporate bonds from two business days after the trade date, referred to in the industry as T+2, to one day, or T+1.
/jlne.ws/3L0dXLr

Tech’s dominance of Russell 1000 will hit record levels after latest reconstitution
Joseph Adinolfi – MarketWatch
This year’s furious rally in technology and megacap stocks is set to leave its mark on Friday when FTSE Russell carries out its latest annual index reconstitution.
/jlne.ws/4bj99LO

GameStop Stock Rises After Roaring Kitty Returns to Social Media
Jack Denton – Barron’s
GameStop shares snapped out of a recent funk on Thursday with momentum carrying into Friday as the most high-profile proponent of the stock returned to social media for the first time in more than a week. The influence of Keith Gill, known as Roaring Kitty on social media, is not to be underestimated.
/jlne.ws/3XItB5p

Exchanges

Trading Commences in Physically-Settled LNG and Carbon Futures on Abaxx Commodity Futures Exchange and Clearinghouse
Abaxx
Abaxx Technologies Inc. (CBOE:ABXX)(OTCQX:ABXXF) (“Abaxx” or the “Company”), a financial software and market infrastructure company, indirect majority shareholder of Abaxx Singapore Pte Ltd. (“Abaxx Singapore”), the owner of Abaxx Commodity Exchange and Clearinghouse (individually, “Abaxx Exchange” and “Abaxx Clearing”), and producer of the SmarterMarkets Podcast, today announced the launch of Abaxx Commodity Futures Exchange and Clearinghouse, with trading commencing in its physically-deliverable liquified natural gas (LNG) and carbon futures contracts.
/jlne.ws/3L2bznd

Regulation & Enforcement

ISDA Publishes Framework to Prepare for Close Out of Derivatives Contracts
ISDA
The International Swaps and Derivatives Association, Inc. (ISDA) has published a new interactive digital framework that market participants can use to help prepare for potential terminations of collateralized derivatives contracts. Launch of the ISDA Close-out Framework is in response to the March 2023 failure of Signature Bank and SVB in the US, which highlighted the complexities of potentially terminating over-the-counter derivatives trading relationships following various post-crisis regulatory reforms. Specifically, in-scope entities are now required to post margin for non-cleared derivatives transactions, while various jurisdictions have introduced mandatory stays on termination rights and remedies as part of bank resolution regimes.
/jlne.ws/3xENikb

The Top Three Needs for Operational Resilience in Derivatives Markets: Takeaways from FIA IDX 2024
Andy Jennings – BornTech
FIA IDX celebrated its 16th year in London last week and revealed an industry that was much like the previous year’s edition: dealing with continued global turbulence, racking up impressive volume numbers, and facing the challenge of perpetual regulatory expansion. Conference attendance was strong and a general feeling of optimism prevails but there are a number of challenges being addressed.
/jlne.ws/4cEZKiQ

Strategy

Monday
Cboe (Video)
With today being @FTSERussell’s 36th annual #RussellReconstitution, @angiemiles shares key market updates in the #RUTreport.
/jlne.ws/3XGXZ08

Miscellaneous

After Biden’s debate showing, markets confront chance of a new candidate
Steve Goldstein – MarketWatch
Markets immediately began to price in an increased likelihood that former President Donald Trump will defeat President Joe Biden after Thursday’s television debate in which the president reinforced rather than dispelled concerns about his age.
Stock-index futures and the U.S. dollar rose during the debate in a showing that even Vice President Kamala Harris conceded was a “slow start” for Biden.
/jlne.ws/3zlCIip

Why is insider betting even a thing? Caveat bookie
Daniel Davies – Financial Times
The last two weeks have given UK voters reason to wonder whether British elections are regulated by the Electoral Commission or by the Gambling Commission. Several constituencies have effectively lost candidates as a result of investigations into whether they placed bets on the timing of the election based on inside knowledge, or whether they made “hedge” bets on an opponent to win.
/jlne.ws/3XKZpGW

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...

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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...

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