| April 02, 2018 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | |
Ready to Follow Through - Chris Concannon, Cboe
JohnLothianNews.com
CBOE and Bats officially became Cboe Global Markets in 2017, which meant much of the year was spent laying the foundations for further integration. Of course, there was also the under-the-radar launch of a crypto futures product, too.
In this video from JLN's annual series with industry leaders, Chris Concannon, Cboe's President and COO, talks about complex order book functionality, the future of a crypto ecosystem at Cboe, how Cboe prepared for more technology migrations on its exchanges and more.
Watch the video and read the rest here »
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The Spread - Week of 3/26 to 3/29
JohnLothianNews.com
Heyo! Markets in 2018 = not boring. This week in The Spread we cover gyrating indices, a gigantic deal, the resurgence of "exotic" ETPs, the Easter holiday, the start of the MLB season and a few sour notes in the financial media space.
Watch the video and see the stories referenced here »
| | | | | | Lead Stories | | | Did Options Markets Dive Off A Liquidity Cliff Last Month? Reviewing the Data One Month Post-Vol Shock
Robert Levy, Hanweck - TABB Forum
As is expected during a major market shock, options spreads on SPX, SPY and VIX widened out substantially. But were they really as extreme as they appeared in the days following the volatility shock of February 5, 2018? Measured in simple price terms, option bid-ask spreads showed extreme widening, with 2-day increases exceeding 700% in SPY, and a more than 400% increase in SPX. Price measures also showed persistent widening, even out to March 1. A more nuanced analysis, however, reveals a more rational outcome in line with expectations given an initial shock of high volatility followed by increasing stability.
/jlne.ws/2GrCZUP
****SD: Not the only area of the market with this concern - see the WSJ's The One Word Giving Money Managers Headaches in 2018: Liquidity
VIX Up 81% Shows Extent of Stock Market Pain in Jarring Quarter
Elena Popina, Sarah Ponczek, and Lu Wang - Bloomberg
Are we having fun yet?
For two years traders bemoaned the tranquility in global equity markets. That era just ended in a fit of turbulence, as stocks plunged into the first correction since early 2016 and volatility almost doubled from historically low levels over the past three months. Dip buying no longer worked, and holding tight on the S&P 500 Index delivered the first quarterly loss in 2 1/2 years.
With the White House spoiling to reorder the global trade hierarchy and the Federal Reserve raising interest rates, the word on Wall Street is: get used to the swings.
/jlne.ws/2GrurNJ
****SD: WSJ - Volatility Roars Back With Biggest Quarterly Rise Ever; Quartz - US stocks just had their most volatile quarter since 2011
A Look Back at Volatility Across All Financial Markets
Russell Rhoads - Cboe Blog
In what felt like the blink of an eye, the first quarter of 2018 is now behind us. We finally got some excitement in the volatility space with VIX rising to levels not seen in a couple of years. After the absolute dud that was 2017, as far as market volatility goes, this was a positive turn of events for those of us that had tired of talking about low volatility and how VIX was not broken, but just reflecting the market environment.
/jlne.ws/2Gp4Dlc
World's Most Indebted Oil Company Makes Major Hedge
Tsvetana Paraskova - OilPrice.com
In February and March, Brazil's state-controlled oil firm Petrobras hedged 128 million barrels of its expected 2018 production Âequal to around 15 percent of total productionÂat an average price of $65 per barrel, to protect part of its operating cash flow generation this year.
/jlne.ws/2GNuHpK
Stock market's volatile Q1 favors 2 groups of companies, Goldman says
Akin Oyedele - Business Insider (SUBSCRIPTION)
While some investors count their losses from the first quarter, Goldman Sachs is betting that renewed volatility was a boon for a small group of companies.
Stock market volatility made a dramatic comeback in Q1, with no shortage of news to spook investors, from an impending trade war to inflation scares.
Though such trading swings are historically typical for stocks, they have become rare in recent years. In Q1, the S&P 500 ended a streak of nine consecutive quarterly gains, and the Cboe Volatility Index, or VIX, which tracks traders' expectations for moves in the stock market, saw its largest one-day spike.
/jlne.ws/2GPlopd
China hammers U.S. goods with tariffs as 'sparks' of trade war fly
Ben Blanchard, Tony Munroe - Reuters
China has increased tariffs by up to 25 percent on 128 U.S. products, from frozen pork and wine to certain fruits and nuts, escalating a dispute between the world's biggest economies in response to U.S. duties on imports of aluminum and steel.
/jlne.ws/2GtArp6
****SD: Happy start of Q2!
Trump's volatility problem
Dan Primack, Mike Allen - Axios
Until now, markets looked at President Trump, and at the tech sector, and saw good times. Now, markets are looking at Trump and tech and seeing risk.
/jlne.ws/2Gr4uho
| | | | | | Exchanges and Clearing | | | Singapore has room for new derivatives exchanges
Angela Tan - The Business Times
Singapore, home to two derivatives exchanges and a third coming onboard in May, has room for new exchanges given the insatiable appetite for better risk management in a volatile world.
More importantly, as investors increase their exposure to Asia, they will need corresponding Asia-centric risk management tools across various asset classes - equities, currencies, commodities, the Monetary Authority of Singapore (MAS) said.
/jlne.ws/2GrAtOn
Japan Exchange Group announces record fiscal 2017
LeapRate
...In FY2017, total derivatives trading volume was 353,597,076 contracts, the third highest on record, and exceeding 300 million contracts for the five consecutive years.
/jlne.ws/2GJzSHd
Japan Exchange Group to sell its 4.95% stake in SGX progressively over three years
The Business Times
Japan Exchange Group (JPX) said on Friday that it will sell its 4.95 per cent stake in Singapore Exchange (SGX) progressively over a period of about three years.
/jlne.ws/2Gs1rpd
Singapore Exchange Mar coking coal traded futures jump 143% on month to 1.01 million mt
Platts
...No options contracts were traded in March...
/jlne.ws/2Gsc0s3
****SD: Intentionally put in the story to highlight that one sentence.
NYSE in Talks to Buy Chicago Stock Exchange; Discussions come after collapse of Chinese-led group's bid for the Midwestern market; $70 million possible price
Dave Michaels and Alexander Osipovich - WSJ (SUBSCRIPTION)
The New York Stock Exchange is in talks to buy the tiny Chicago Stock Exchange, after the recent collapse of a two-year acquisition effort by a Chinese-led investor group, people familiar with the situation said.
/goo.gl/vZxsSd
****SD: As I understand it, while handling less than one percent of the nation's daily equity volume, a notable chunk of CHX's flow is related to the stock portions of complex options trades originating at Cboe. If NYSE buys the more than 130-year-old exchange, I wonder how that would evolve.
| | | | | | Regulation & Enforcement | | | SEBI mulls 'concentration margin' in derivatives
The Hindu
Traders with a very high or significant exposure to commodity and equity derivatives market may soon have to pay a higher margin compared with other traders as the Securities and Exchange Board of India (SEBI) is planning to create a structured framework for levying a 'concentration margin,' according to a person familiar with the development.
/jlne.ws/2GNONzT
| | | | | | Strategy | | | March Madness hits the equity markets
David Nelson - Yahoo Finance
March Madness went well beyond the basketball court this season, hitting equity markets forcing some investors to the side lines. The roller coaster ride on and off the courts kept investors on edge wondering if the market would fold like the No. 1 seed Virginia. For the moment, it looks like a successful retest of the February lows, stopping once again at the all-important 200-day moving average. Like most retests our confidence won't be restored until we've put some distance between us and volatile first quarter.
/jlne.ws/2GPwHxw
****SD: It really seemed like Loyola had a chance against Michigan this weekend. Who you got tonight - Nova or Mich?
Tesla Model 3 Deliveries Expected to Come Up Short; Shares Fall
Rachel Evans - Bloomberg
So much for a quiet session in U.S. stock markets.
With the Cboe Volatility Index rising the most in more than a week amid an equity-market rout, three of Monday's 10 most-traded exchange-traded products bet on higher volatility, data compiled by Bloomberg show.
/jlne.ws/2GQ8Aiq
Volatility Trades Return to ETP Market
Rachel Evans - Bloomberg
So much for a quiet session in U.S. stock markets.
/jlne.ws/2GNQfCl
****SD: The short vol trade will not die so long as volatility exists - I'm sure plenty of people see these spikes as entry points.
| | | | | | Education | | | The 'Bonus' Dividends Most Investors Forget To Collect
Nasdaq
I hate to say tell you this... but if you're an income investor, then chances are you're leaving money on the table.
Why? Because I'm willing to bet that 9 out of 10 of income seekers haven't even considered the simple technique that can deliver extra "bonus" dividends to their account again and again throughout the year.
/jlne.ws/2Gqzkq5
| | | | | | Miscellaneous | | | Margin Debt At All-Time In January But Now (Slightly) Lower
Callum Thomas - Investing.com
NYSE margin debt is one of those old stock market indicators that has been around for a long time with history back to 1950, and many analysts making use of it through the ages as another data piece to understand the lay of the market land, investor leverage, and investor capacity for buying. But something has changed!
/jlne.ws/2GQvx4X
Interactive Brokers Reports Brokerage Metrics and Other Financial Information for March 2018
BusinessWire
Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic broker, today reported its Electronic Brokerage monthly performance metrics for March.
/jlne.ws/2GPS2XC
****SD: Avg. commission per options order was $6.29 on an average order of 9.2 contracts.
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