With GameStop earnings on tap, options traders bet on muted moves

Sep 8, 2021

Lead Stories

With GameStop earnings on tap, options traders bet on muted moves
Saqib Iqbal Ahmed – Reuters
Options traders are expecting comparatively subdued moves in GameStop Inc (GME.N) shares around its earnings report, as the company that helped spark the so-called meme stock phenomenon prepares to report quarterly results on Wednesday.
/reut.rs/2VpeYX4

GameStop Fans Face Off Against Earnings Day History of Defeat
Bailey Lipschultz – Bloomberg
Earnings day hasn’t been kind to GameStop Corp. investors — and analysts, options trading and recent history suggest Wednesday evening’s won’t likely be any different.
Shares of the video-game retailer were up 1.2% in New York on Wednesday but they have tumbled 18% on average the day after earnings since June 2019 — they gained on such reports only twice since the start of 2018. Add on that the options market implies the stock will swing 15% by the end of Thursday’s session and it suggests it could be a choppy few days ahead for the company that helped set off the meme-stock trend.
/bloom.bg/3l4U0Wg

Options Bears Target Coinbase Stock Following SEC News
Jake Scott – Yahoo Finance
The shares of Coinbase Global Inc (NASDAQ:COIN) are down 2.3% to trade at $260.74 at last check, after the cryptocurrency exchange staple revealed today that the U.S. Securities and Exchange Commission (SEC) delivered a Wells notice to the company, intending to sue over its product, Coinbase Lend. The interest-earning product was slated for release in the upcoming weeks, and would allow users to earn a 4% annual percentage yield in exchange for lending their crypto holdings. In response, Coinbase announced they’re delaying Lend’s launch until at least October.
/yhoo.it/3zZ88Xw

‘Widowmaker’ Natural Gas Spread Doubles as Traders Eye Winter
Simon Casey – Bloomberg
A natural gas trade known as the widowmaker because of its volatility is once again in focus amid concerns about the level of U.S. inventories as the country get closer to winter.
The spread between March and April futures — essentially a bet on how tight supplies of the fuel will be at end of North American winter — more than doubled. In other words, buying drove March futures way above gas for delivery the following month.
/bloom.bg/2XagVaF

Citi Cautions Investors on Lack of Realized Volatility
Bloomberg (Video)
Kristen Bitterly, regional head of investments North America, explains why investors should expect a rise in volatility and expects a flight to quality ahead for markets. She speaks on “Bloomberg Surveillance.”
/bloom.bg/3nsSmkj

Bitcoin’s Latest Plunge Brings Key Technical Levels Into Play
Akshay Chinchalkar – Bloomberg
Bitcoin’s slump following El Salvador’s troubled rollout of the largest cryptocurrency as legal tender has put several key technical levels into focus that could point to greater losses ahead.
The virtual coin was trading at about $44,900 as of 9:15 a.m. in London, having slid as much as 17% a day earlier before paring some of the losses while El Salvador was working through some first-day technical glitches.
/bloom.bg/3E0D6Rq

Exchanges

Cboe Global Markets Reports August 2021 Trading Volume
Cboe Global Markets
Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, today reported August monthly trading volume statistics across its global business lines.
The data sheet “Cboe Global Markets Monthly Volume & RPC/Net Revenue Capture Report” contains an overview of certain August trading statistics and market share by business segment, volume in select index products, and RPC/net capture, which is reported on a one-month lag, across business lines.
/bit.ly/38MUhaE

Options Trader Alert #2021 – 53
Nasdaq PHLX To Increase Maximum Expiration Date to 15 Years for FLEX Equity and Index Options
Category: Listing
Markets Impacted: Nasdaq PHLX
On Friday, September 24, 2021, Nasdaq PHLX LLC (Phlx) will increase the maximum expiration date for FLEX index and equity options to 15 years. The maximum expiration date for FLEX currency options will remain at 3 years.
/bit.ly/3tx8vpF

Uncleared Margin Rules and FX: Eurex offers solutions to a complex affair
Eurex
Phase 5 of the Uncleared Margin Rules (UMR), which came into effect in September 2021, is expected to drive buy-side demand for FX futures and OTC FX clearing since these offer a viable alternative to the bilateral OTC market. However, UMR and FX is a complex story. To understand it in full, we asked Archana Varshney, Head OTC FX Sales and Business Development at Eurex, for an explanation that was as simple as possible.
Archana, how is FX affected by UMR?
The key takeaway is that, except for FX spot, all FX bilateral exposures such as non-deliverable forwards (NDFs), FX forwards, FX swaps, FX options and hybrid FX products like cross currency swaps, are captured and count towards a client’s Average Aggregate Notional Amount (ANAA) threshold calculation.
/bit.ly/3l8FLzB

Nodal Exchange Achieves New Records in Power Futures (up 30%) & Environmental Futures (up 173%) and Launches New Renewable Contracts
Nodal Exchange
Nodal Exchange announced new trading records in power and environmental futures in August 2021. In power, Nodal set a calendar month record for August with 164 million MWh of traded power futures volume in the month, up 30% from the prior year. Nodal continues to be the market leader in North American power futures having the majority of the open interest with over 1 billion MWh.
Nodal Exchange also had its strongest ever month in environmental futures trading with record monthly volume of 31,453 lots traded, up 173% from the prior year, and record end of month open interest of 145,884 lots, up 90% from the prior year. Nodal also posted a single-day record of 6,687 lots for both futures and options traded on August 3, 2021.
/bit.ly/3zV2s0F

Strategy

FX options wrap – Awake from slumber to cover shorts, but no panic
Reuters
A resurgent USD has awoken the options market, but despite renewed demand for FX volatility protection and USD calls, there was no panic in the price action.
/bit.ly/3ng7FML

Miscellaneous

The COVID-19 risk in the Chinese option market
Jianhui Li, Xinfeng Ruan, Sebastian A. Gehricke, Jin E. Zhang – Wiley Online Library
Abstract
The COVID-19 pandemic has increased fear of a financial market crash in China. We use an implied volatility slope measure, which proxies the cost of option protection against and therefore trader’s fear of crash risk, using the Shanghai Shenzhen CSI 300 Index options. We show that this measure is positively related to new cases and deaths of the pandemic during the COVID-19 outbreak in China. Option traders are willing to pay more for hedging downside tail risk as the pandemic worsens, and are no longer as concerned by news of cases and deaths after the lift of the lockdown.
/bit.ly/3hejQGk

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