| March 16, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | A $905 Million VIX Note (VXX) Goes Haywire After Barclays (BARC) Halts Sales
Sam Potter, Katherine Greifeld, and Emily Graffeo - Bloomberg
A $905 million exchange-traded note betting on stock volatility endured a roller-coaster session on heavy volumes Tuesday after becoming untethered from the value of its assets following Barclays Plc's move to stop issuing new shares.
Trading in the iPath Series B S&P 500 VIX Short-Term Futures ETN (ticker VXX) was halted five times in the first hour as the product jumped as much as 45%. Volumes were at one point more than 50% above the 30-day average. The note later reversed gains to close lower in the wild session.
/jlne.ws/36nUiUG
Hedge funds make retreat from US stocks after big swings hurt returns
Eric Platt in New York and Miles Kruppa - Financial Times
Hedge funds have dramatically scaled back their footprint in the US stock market as sharp swings have pummelled big money managers.
Funds that trade with some of the largest banks on Wall Street including Morgan Stanley, Goldman Sachs and JPMorgan Chase have rapidly cut long and short stock positions, or bets on prices rising or falling, according to interviews with traders and data that the banks have circulated to their clients.
/jlne.ws/34Mk8B6
Oil's Wild Gyrations Are Forcing Traders Off the Crude Market
Serene Cheong and Alex Longley - Bloomberg
To understand why London's Brent oil jumped and then slumped $40 a barrel in little over two weeks, take a look behind the scenes. While the run-up in crude prices was fueled by Russia's invasion of Ukraine, a black swan event that triggered sanctions and mayhem, oil's collapse has been prompted by some position closures as risky trades were reined in amid soaring volatility. Also, some speculators likely took profit after Brent spiked to its highest level since 2008.
/jlne.ws/3w7mLZD
Nickel Price Plunges 5% and LME Halts Trading Again As Chaos Continues
Harry Robertson - Business Insider
The chaos in the nickel market resumed Wednesday, as prices instantly fell 5% and the London Metal Exchange was forced to suspend trading due to a glitch just minutes after reopening from a rare week-long break.
Nickel prices skyrocketed above $100,000 a ton last week, having started the month at around $25,000, after Russia's invasion of Ukraine pushed up commodities prices and wrong-footed many traders, unleashing what's known as a "short squeeze."
/jlne.ws/36k7ARY
Hycroft (HYMC) Options, Stock Trading Volume Went Crazy Before AMC Deal
Bailey Lipschultz - Bloomberg
Traders piled into the shares and options of Hycroft Mining Holding Corp. and AMC Entertainment Holdings Inc. last week, well ahead of Tuesday's surprise announcement that the movie theater operator was buying a stake in the gold miner.
Hycroft's stock is up 361% in a little more than a week, from 33 cents on March 7 to $1.52 on Tuesday. An average of 190 million Hycroft shares have traded each day over the past week. That's more than 800 times the average daily trading volume since the miner's deal to go public through a blank-check merger in June 2020.
/jlne.ws/3ib6IBZ
**** JB: Also see The Wall Street Journal story, A New Meme-Stock Frenzy Led AMC to Gold Mine Stake.
Shorting Tether Renews Debate Around Most Traded Cryptocurrency
Yueqi Yang and Muyao Shen - Bloomberg
A renewal of interest by traditional hedge funds in shorting Tether has highlighted the difficulty of betting against the stablecoin that serves as a foundation for much of the trading in the cryptocurrency market.
At stake is not just Tether's $80 billion market value, but also the vast array of trades facilitated by Tether in the crypto market. Fir Tree Capital Management is making a substantial short wager on Tether, predicting it could pay off within a year, Bloomberg News reported last week, citing sources familiar with the matter.
/jlne.ws/3MVUOtJ
| | | | | | Exchanges | | | Cboe Appoints Stephen Berte as President of BIDS Trading
Cboe
Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, today announced the appointment of Stephen Berte as President of its BIDS Trading unit, effective April 4, 2022.
/bit.ly/3tgSANV
London Metal Exchange suffers fresh glitch as it attempts to restart nickel trading
Neil Hume and Philip Stafford - Financial Times
The London Metal Exchange suspended electronic trading in nickel on Wednesday, just moments after the world's main market for the metal reopened for business following a week-long shutdown.
The fresh trading halt came after the price of nickel tumbled when the market opened. Newly installed curbs to support the resumption were meant to prevent the price from declining by more than 5 per cent, but a handful of trades breached the limit of $45,590 a tonne, according to Refinitiv data.
/jlne.ws/3L774pJ
Crypto derivatives - 'Same activity, same risk, same regulation'
FIA
Welcome back to Boca. It is fantastic to be with you. Or to quote Sir Paul McCartney: Get back to where you once belonged. I can't believe we are here!
It's so great to see all of you after three years away. As you probably noticed, we've had some significant changes here at The Boca Raton resort. But one thing that hasn't changed is the positive energy that has been the signature of Boca for the last 46 years.
/jlne.ws/3tVTAGc
Eurex FX update
Eurex
Eurex FX continues building its positioning as Europe's FX liquidity hub of choice. The Q1 volumes and open interest further cement the transition trend from the traditional FX market towards the listed environment. Listed FX allows participants to access firm liquidity pools benefiting from the integrity and safety of an on-exchange centrally cleared marketplace.
FX Futures are well on track for another record quarter. Overall, more than 300,000 contracts were traded by March 10th, representing a YTD growth rate of 104%. With the open interest soaring to EUR8.1 bn, the average daily volume continues to grow to 6,180 contracts YTD.
/jlne.ws/3u4SIPG
| | | | | | Technology | | | Miami International Holdings Announces Selection of Vermiculus Financial Technology to Provide a Real-time Clearing Solution for Minneapolis Grain Exchange Princeton, N.J.
MIAX
Miami International Holdings, Inc. (MIH), owner of Miami International Securities Exchange, LLC (MIAX ), MIAX PEARL, LLC (MIAX Pearl ), MIAX Emerald, LLC (MIAX Emerald ), Minneapolis Grain Exchange, LLC (MGEXTM), and Bermuda Stock Exchange (BSXTM), announced today that Vermiculus Financial Technology AB (Vermiculus) has been selected to deliver a real-time clearing solution for MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO). The system will provide clearing services based on VeriClearâ¢, an elastically scalable and Artificial Intelligence (AI) powered real-time clearing system developed by Vermiculus.
/bit.ly/3u4OY0z
| | | | | | Strategy | | | A bet on stock-market volatility might saddle investors with hundreds of millions in losses, as Barclays makes a big change to funds
Mark DeCambre - MarketWatch
Market participants attempting to bet on the stock market's volatility are facing a reckoning Tuesday, with the possibility of hundreds of millions in losses in sight as fund provider Barclays says it has suspended the sales and issuance of new shares of a VIX-pegged instrument.
Barclays said it temporarily stopped the creation of new shares of the iPath Series B S&P 500 VIX Short-Term Futures ETN, as the exchange-traded note has seen its value surge in recent days amid concerns about the war in Eastern Europe and worries about inflation and the potential for monetary policy missteps.
/jlne.ws/3IbpweM
Barclays' VXX price jump drives double-digit gains for volatility arbitrage fund
Saqib Iqbal Ahmed - Reuters
Days before Thanksgiving, Kris Sidial, a co-founder at volatility arbitrage fund The Ambrus Group, told investors the firm was betting that extreme price moves in some volatility-tracking exchange traded notes were likely to get worse.
The firm bought deep out-of-the-money call options on the iPath Series B S&P 500 VIX Short-Term Futures ETN - relatively inexpensive contracts that had a low chance of making money but stood to explode in value if the share price were to soar.
/jlne.ws/3JhS33z
| | | | | | Education | | | How To Find The Best Options Trade Using Theoretical Values
Matt Amberson - Nasdaq
Typically, traders will use the middle price between an options bid and ask to think about a fair value. Problems occur using this mid price method:
- when markets are wide,
- when a bid and ask are temporarily off from their normal levels based on recent demand, or
- when the entire expiration month or implied volatility is temporarily off based on underlying factors.
/jlne.ws/3qaOhkW
| | | | | | Miscellaneous | | | Stock Market Volatility and Tax Season: Capital Losses Come With a Silver Lining
Stuart Trow - Bloomberg
With April 5, the end of the U.K. tax year, fast approaching, and many investors nursing significant losses in volatile markets, now is a good time to consider what can be done to mitigate any capital gains tax (CGT) liabilities you might have.
Gains in the stock market are especially amenable to careful tax planning. Unlike assets such as property, stocks are liquid and a holding can easily be divided to maximize the tax advantage. Selling sufficient stock to realize a gain of no more than the 12,300-pound ($16,000) annual capital gains tax allowance means that there would be no CGT to pay.
/jlne.ws/36lqgAL
The stock market is not a roller coaster, a bull, a bear or a dead cat
Jeremy Olshan - MarketWatch
When the stock market plunges, we all go to Disney World â or Six Flags. Buckle up for this roller coaster, the commentators tell us. Keep your hands, arms and assets inside the vehicle at all times.
The theme-park thrill ride is our most tired metaphor for market volatility. When the VIX spiked this year, roller coasters showed up everywhere on financial media in both words and images: on the cover of the Economist, on all the major financial networks and newspapers, and, too often for my taste, on MarketWatch.
/jlne.ws/3thS42b
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| | | Jeff Bergstrom
Editor
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