| | | | | | | April 25, 2025 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | | | Observations & Insight | | | Some here may have noticed our websites were flaky the last few days. We were a target of a denial of service attack (DDoS ... distributed denial of service attack). Or, at least, something very like one. A bot army descended on MarketsWiki, and both it and the JLN website were affected since they share the same server. We had some protection from this, but not enough. I have sorted it out (although I thought that before, and they came back, but I believe I have it this time). I mention this because, in the course of fixing things, I have improved our websites for our readers. The websites should be faster and more responsive now, especially for our readers who are not in the US. Among other things, I implemented a Content Delivery Network (CDN), which means our websites now have copies in several countries worldwide, specifically in Tokyo (Japan), Singapore, Sydney (Australia), Warsaw (Poland), Hamina (Finland), Frankfurt (Germany), Eemshaven (Netherlands), Paris (France), and Sao Paulo (Brazil). I wish we also had one in India, since we have many visitors from there, but at least Singapore is closer to them than Chicago. There are also several within the US. This will improve everyone's speed in accessing our websites. This was a rite of passage for me, administering the websites. Not a fun one, but what doesn't kill you makes you stronger (or so I have heard). ~ JB
In yesterday's newsletter, John mentioned some videos from the Cboe that were educational for Options traders. I think it is also worth mentioning that a couple of days ago, the OIC (Options Industry Council) announced a new education program called "Ask Us (Almost) Anything - OIC Office Hours." Roughly twice a month, the OIC will answer questions from people on a live webinar on the topic of the day or anything at all (options related ... if you need relationship advice go somewhere else) that someone wants to ask (they will flip-flop from a stated topic to ask anything). The first two topics are "Buying Options: Using Call Options as an Alternative to Buying Stock" and "Key Points to Know About Selling Options." Between those are "Ask Anything" sessions. They start May 14. You can see the schedule HERE. ~ JB
| | | | | | Lead Stories | | | FLASH FRIDAY: An Options Market Prediction That Didn't Pan Out
Editorial Staff - Traders Magazine
As Yogi Berra said, it's tough to make predictions, especially about the future.
Case in point: a 2006 Traders Magazine article entitled The Coming Shakeout in the Options Market.
From the article: "Every year like clockwork, the heads of the U.S. options exchanges predict a bout of industry consolidation. There has been public and not-so-public flirting in recent years, but no pair of options exchanges has actually made it to the altar. Indeed, seven years after the exchanges began competing directly with one another in 1999, the number of exchanges has risen from four to six. That trend may be at an end. Broader changes now taking place could shake up the status quo-and potentially make the longstanding prediction for industry consolidation come true."
Almost two decades later, it's fair to say that shakeout never happened. In fact, it's been the opposite, as expansion has ruled the day, and today's landscape of six exchange groups running 18 (soon to be 19) options exchanges makes the six number from 2006 seem positively antiquated and quaint.
/jlne.ws/4jrgPQP
Wall Street Fear Index Slides After Google Earnings
George Glover - Barron's
Investors were feeling a little calmer on Friday as solid results from Google parent Alphabet helped ease ongoing worries about trade tensions between China and the U.S.
The Cboe Volatility Index, a widely followed fear gauge that tracks S&P 500 options contracts and trades under the ticker VIX, fell 1% to 26 in early trading. Any reading of above 20 is seen as a sign of relatively high volatility.
/jlne.ws/3YJG20E
Derivatives exchange CME set to launch XRP futures in crypto push
Niket Nishant - Reuters
CME Group will launch futures contracts tied to the XRP cryptocurrency next month, the derivatives exchange said on Thursday, aiming to tap into the growing interest in tokens other than bitcoin and ether. The cash-settled futures are set to launch on May 19, pending regulators' approval. Futures contracts let traders bet on or hedge against the future price movements of an asset, without owning it. CME's move highlights a push to offer sophisticated trading tools for altcoins - which typically refer to tokens smaller than bitcoin and ether. Initially viewed as speculative assets, these coins are fast becoming a vital component of investors' portfolios and can be a safe haven at a time when tariff-driven volatility has rattled equities.
/jlne.ws/3RUFWjb
Cboe Options to allow new type of complex FLEX order
Maria Nikolova - FX Newsgroup
Effective trade date June 23, 2025, Cboe Options Exchange (C1) will allow a new type of complex FLEX order which may include a combination of FLEX Option series and non-FLEX Option series on the same underlying security or index. Complex FLEX orders may optionally include an underlying equity leg component. All complex FLEX orders, including those with or without non-FLEX instruments, will allow legs with different exercise styles (e.g., European vs. American) within the same order.
/jlne.ws/42N8rnU
Nasdaq Offers New Electronic Flex Options on ISE
Markets Media
In recent years, U.S. options have seen significant growth in volume and overall interest from institutional investors, as these derivative products allow for greater risk management and downside protection in today's rapidly changing market conditions. This week Nasdaq launched electronic Flexible Exchange Options (Flex Options) on the Nasdaq International Securities Exchange (ISE), providing options contracts tailored to meet the specific requirements of investors, enabling market participants to have greater flexibility in responding to shifting trading environments.
/jlne.ws/4cMBcWa
World's First Catastrophe-Bond ETF Falters in 'Crazy' Market
Gautam Naik - Bloomberg
The world's first-ever exchange-traded fund based on catastrophe bonds has failed to get the seed capital it expected after launching on the eve of the Trump administration's tariff war. "Some of our seed capital investors are sitting on the sidelines because the market turmoil has taken people's eyes off new asset classes," said Ethan Powell, chief investment officer of Texas-based Brookmont Capital Management LLC, which oversees the fund. "It's a crazy environment," and "we don't want to be too pushy right now."
/jlne.ws/449e2XZ
***** We should have a credit default swap on this ETF, and then if we had more ETFs like this and more CDS, we could have an ETF on the credit default swaps on the Cat ETFs. ~JJL
Trump's Trade Whiplash Sinks World Into Dreaded 'Uncertainty'
Enda Curran, Jorge Valero, and Katia Dmitrieva - Bloomberg
The world's finance chiefs flocked to Washington this week to see up close how President Donald Trump's effort to overhaul the global economic order is shaking markets and eroding growth.
As they gathered in private meetings and opined on panels about how his tariffs upend free-trade orthodoxy, markets were whiplashed by signals the US may agree to cut its massive levies on China, which even Treasury Secretary Scott Bessent said amount to a trade embargo between the world's biggest economies.
/jlne.ws/42KGlJN
| | | | | | Exchanges | | | OCC's security chief on generative AI with guardrails; Clearing house looks to scale technology across risk and data operations - but safety is still the watchword
Menghan Xiao - Risk.net
The financial industry's scramble to adopt generative AI has sometimes resembled a modern-day goldrush of companies beating a trail to the tech haven of California's Silicon Valley in search of a competitive edge in this latest form of artificial intelligence. Leading the effort in many companies is the chief technology officer. At the Options Clearing Corporation, the remit for GenAI development falls instead to Matt Rathbun, chief security officer-elect at the derivatives clearing giant.
/jlne.ws/3EDrIA8
Shanghai Futures Exchange consults on aluminium alloy futures and options rules
Violet Li and Lewis Jackson - Zawya
BEIJING: The Shanghai Futures Exchange issued a public consultation notice on Friday regarding draft rules for aluminium alloy futures contracts, options contracts and business guidelines, with a deadline for comments set for May 6, 2025. The proposed contracts will be based on ADC12 aluminum alloy and priced in yuan per metric ton, with daily price limits set at 3% of the previous day's settlement.
/jlne.ws/4cK43dG
CME Group to Expand Crypto Derivatives Suite with Launch of XRP Futures
CME Group
CME Group, the world's leading derivatives marketplace, today announced plans to launch XRP futures on May 19, pending regulatory review. Market participants will have the choice to trade both a micro-sized contract (2,500 XRP) and a larger-sized contract (50,000 XRP).
/jlne.ws/4jMc4RA
VSTOXX turns 20: Experts appraise the volatility index's standing in equity markets
Eurex
The VSTOXX was introduced on April 20, 2005, during a calm and positive time for equity markets. The launch was a significant moment for European investors, offering a transparent measure of implied volatility that could be used to inform investment decisions. Not only was the VSTOXX quickly adopted as the region's undisputed gauge of market stress, but it also helped broaden access to volatility as an investable asset class in Europe and facilitated multiple volatility trading strategies. In 2024, over 21 million futures and options on VSTOXX exchanged hands on Eurex.
/jlne.ws/3S6Dshv
ESG Index Derivatives Development Update Q1/2025; 2025 - A strong first quarter for ESG Index Derivatives
Eurex
The Eurex ESG Index Derivatives segment maintained its strong momentum in Q1 2025, building upon the substantial growth seen in 2024 with a peak in notional volume.
/jlne.ws/4jU8KnP
Introducing the European Common Prospectus; Euronext introduces the European Common Prospectus to accelerate capital market integration and boost IPO activity across the EU.
Euronext
Euronext has launched the European Common Prospectus, a single, standardised template for equity issuances that enhances capital market integration and cross-border investment across Europe. To permit long-term European competitiveness and innovation, improving access to European capital markets is essential. While the Listing Act, aimed at simplifying European listing rules, is not expected until June 2026, there is an immediate need to boost IPO activity in Europe. To meet this need, Euronext began to develop its new European Common Prospectus in November 2024, following the publication of the Listing Act.
/jlne.ws/4jwzsTC
| | | | | | Strategy | | | Trump Tariffs Are Creating Chaos. Barry Ritholtz Says It's Time to Embrace Your Inner Mr. Spock.; The chairman of Ritholtz Wealth Management says his worst-case scenario for the trade war is bleak but investors still need to avoid acting based on emotion.
Andrew Welsch - Barron's
President Donald Trump's on-again, off-again approach to tariffs has whipsawed markets and left investors struggling to keep their footing. That makes Barry Ritholtz's new book, How Not to Invest, a timely read because it urges investors to maintain a long-term perspective. "There's always a reason to think the world is going to hell," says the co-founder, chairman, and chief investment officer of New York-based Ritholtz Wealth Management. "Investors have to ask themselves the question: Is it really worse today than it was during the financial crisis, the pandemic, or 9/11?"
/jlne.ws/4cMASGW
| | | | | | Miscellaneous | | | Crypto Traders are Using Memecoins to Bet on Who Will Be the Next Pope
Emily Nicolle - Bloomberg
Vaticoins
Last year, the US presidential election turned crypto-based prediction markets platform Polymarket into a real-time polling source (with astonishing accuracy). This year, some traders are using memecoins to bet on world events instead.
Early on Easter Monday, the Vatican announced that Pope Francis had died at the age of 88. Following his funeral on April 26, the Roman Catholic Church's most senior ranks will gather to select Francis' successor through a process known as a papal conclave. A shortlist of potential candidates for the papacy has already emerged, highlighting the cardinals who are favored to replace Francis.
/jlne.ws/42segYW
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| | | | John Lothian News (JLN) is the news division of John J. Lothian & Company, Inc. (JJLCO). The online media and financial services firm is staffed by derivatives industry, journalism and technology professionals. | | | | | | | John Lothian News Editorial Staff: | | | John Lothian
Publisher | | | Sarah Rudolph
Editor-in-Chief
| | | Jeff Bergstrom
Editor
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