Observations & Insight
The Spread: Tiger Billionaire
This week on The Spread, the unregulated crypto exchange Deribit announces a bitcoin volatility index, the CME announces over 1 million micro options contracts have traded, and more.
White-Hot Stock Rally Masks Mammoth Value Swings
Gunjan Banerji – WSJ
Explosive moves in individual stocks and sectors are underpinning a white-hot streak in the market.
Major U.S. stock indexes have kicked off the second quarter with a bang, powering higher and building on a blockbuster rally that began in March of last year. The market’s ascent since then has been nearly relentless, pushing the S&P 500 to 17 new highs in 2021 and recently hurtling past the index’s 4000 mark for the first time. The Cboe Volatility Index, a gauge of stock volatility based on options priced on the S&P 500, recently closed at its lowest level in more than a year.
Bitcoin futures and options trading volumes reached all-time highs in March
MK Manoylov – The Block
Monthly volumes for bitcoin futures and options both broke all-time highs in March, according to data compiled by The Block Research. Bitcoin futures volume reached $2.13 billion last month, or 1.90% larger than the previous high, which was recorded in January. The top players accounting for March’s bitcoin future volumes were Binance with 33.84% of the volume, Huobi with 22.32%, and OKEx with 13.75%.
Stocks tied to Archegos are roiling markets again as $2 billion of block trades drives new bout of volatility
Isabelle Lee – Markets Insider
Companies linked to the Archegos Capital Management meltdown at the end of last month were struck by a new wave of volatility on Tuesday after Credit Suisse initiated a block trade worth around $2.3 billion in an attempt to limit further losses.
Stocks including ViacomCBS, Discovery, and Tencent all whipsawed, and were down in premarket trading before recovering through the morning.
Citadel Gets the Spotlight
Tom Maloney – Bloomberg
For the world of finance, it was must-watch TV. A U.S. congressional committee summoned an odd assortment of Wall Street characters to testify about a saga that captured so much public attention it was discussed on Good Morning America. How did amateur traders, billionaire hedge fund managers, social media posts, and an opaque market structure fuel a dizzying surge, and sudden crash, in the shares of video game retailer GameStop Corp.?
Exchanges and Clearing
Miami International Holdings Reports March 2021 Trading Results, MIAX Exchange Group Sets New Monthly Market Share and Volume Records
Miami International Holdings, Inc. today reported March 2021 trading results for its U.S. exchange subsidiaries – MIAX, MIAX Pearl and MIAX Emerald (together, the MIAX Exchange Group) and the Minneapolis Grain Exchange (MGEX). In U.S. options, the MIAX Exchange Group collectively executed over 116.9 million multi-listed options contracts for a combined average daily volume (ADV) of 5,083,825 contracts, representing a total U.S. multi-listed options market share of 13.65%. The 13.65% market share represents an increase of over 18% from March 2020.
Strong commodity prices and improved financial conditions boost Ag Economy Barometer
The Purdue University/CME Group Ag Economy Barometer rose 12 points in March to a reading of 177, marking the highest reading for the barometer since October 2020. The rise was attributed to producers’ more optimistic view of the future. The Index of Future Expectations snapped a four-month decline, rising 16 points to a reading of 164 in March. The Index of Current Conditions tied with its previous all-time high, rising two points to a reading of 202. The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted from March 22-26, 2021.
Initial Listing of the USD Malaysian Crude Palm Oil Day 15th Bullet Futures USD Malaysian Crude Palm Oil Day 10th Financial Options Contracts
Effective Sunday, May 2, 2021, for trade date Monday, May 3, 2021, and pending all relevant CFTC regulatory review periods, Chicago Mercantile Exchange Inc. (“CME” or “Exchange”) will list the USD Malaysian Crude Palm Oil Day 15th Bullet Futures and USD Malaysian Crude Palm Oil Day 10th Financial Options contracts (the “Contracts”) for trading on the CME Globex electronic platform (“CME Globex”) and for submission for clearing via CME ClearPort as more specifically described below.
GE Earnings Are Coming. Here’s How to Play It.
Steven M. Sears – Barron’s
The investor argument over General Electric that has lasted since early March will likely end when the company reports earnings in late April.
After a month of digesting major financial announcements from GE (ticker: GE), investors seem ready to take the stock higher, recent trading suggests.
Short Put Option Strategy: Basics, Example, and Defense | tradeTALK Series
Mike Butler – tastytrade
The short put strategy is an effective way to acquire 100 shares of stock at a lower cost basis than the market is offering right now. You can be profitable if the stock stays the same, goes up, or even goes down a little bit, which is why it’s such a high probability trade. But what happens if the stock goes down dramatically? How can we reduce our max loss, improve our probability of success, improve our max profit and give ourselves more time to be right on our directional assumption? Mike Butler covers it all in his tradeTALK on Short Puts and here, too!
Fundamentals of Futures & Options (also applicable to Series 3 Exam)
For more than 30 years, IFM has consistently provided learners with a solid foundation and understanding of futures and options markets and trading including terminology, risk management, pricing, and basic trade strategies. This instructor-led virtual course includes lectures from an engaging instructor with real-world expertise and supported by class discussion, practice exercises and educational materials. The course fee includes two must-read industry books – Futures and Options and the Guide to U.S. Futures Regulation.
Date May 10, 2021 12:00 p.m. – May 14, 2021 2:00 p.m.
Location: Virtual Live. 2-hour sessions over 5 days.
Instructor: Marti Tirinnanzi
Class size registration is limited to approximately 20 participants to promote student participation and interaction.
A New Virtual Experience
The Options Industry Conference is Going Virtual in 2021. Join OCC and the options exchanges for the 39th annual Options Industry Conference, April 28-29, 2021. While the conference will be held virtually for the first time in its history, the focus will continue to be the key topics facing the options industry today, from the regulatory shifts in the U.S. and Europe to the technological developments that are driving monumental change in markets around the globe.
DOJ enforcement priorities in commodities & derivatives markets: A discussion with DOJ leadership
April 13, 2021 • 1:00 p.m. – 2:00 p.m. ET
During this discussion, James McDonald, Sullivan & Cromwell Partner, will interview Robert Zink, U.S. Department of Justice, Acting Assistant Attorney General (and Chief of the DOJ Fraud Section from January 2019 to August 2020), regarding DOJ’s enforcement priorities in the commodities and derivatives markets and white collar area more generally.
Stock Trading: The Robinhood Generation Is Debating Old School Investors
Misyrlena Egkolfopoulou and Katharine Gemmell – Bloomberg
In the Before Times, those seeking thrills, excitement and drama pursued the arts, or perhaps joined the armed forces. Anything, really, except the decidedly uncool prospect of spending one’s days tied to a desk and looking at a bunch of numbers.
Not anymore. Now, getting a Robinhood trading account, checking the price of GameStop Corp. or Tesla Inc., analyzing market data on Excel sheets and buying shares for no reason other than “we like the stock” is considered not only hip, but also a mark of rebellion against the establishment.
Credit Suisse’s Top Bankers Press CEO for Answers After Archegos Mess
Rebecca Ungarino, Dakin Campbell, Samantha Stokes and Bradley Saacks – Business Insider
The Credit Suisse managing directors who dialed into a call last Monday afternoon with the bank’s chief executive and head of investment banking could not conceal their frustration.
CEO Thomas Gottstein and investment banking chief Brian Chin had convened the conference to take questions about how they planned to contain losses stemming from the spectacular blowup of Archegos Capital Management, one of the Swiss bank’s clients. At Archegos, a family office founded by the hedge-fund billionaire Bill Hwang, $8 billion in assets were vaporized when massive, concentrated bets held in swaps positions suddenly moved against it.