| | | | | | | | January 28, 2025 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Hedge-Fund Options Bet Surged Most Since 2020 in Tech Tumult; Dispersion trade won amid selloff focused mainly on tech names; Quant strategies targeting value, low volatility also shone
Justina Lee - Bloomberg
There was a surprising winner from the market carnage that unfolded on Monday: A popular options strategy that bets on calm.
The dispersion trade - which buys options in single stocks and sells contracts on an index - had its best day since 2020 as AI fears swept the market and sank some of the biggest US companies.
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Options on French Companies Pick Up Steam as Index Lags Behind
Christian Dass - Bloomberg
While interest in trading options on France's main index has lagged behind European gauges - especially the benchmark Euro Stoxx 50 index - activity on single names has picked up. Trading volume on Euro Stoxx 50 options is about flat over the past decade, with an average daily options volume of almost 1 million lots representing about EUR50 billion ($52.1 billion) notional value per day.
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Memecoin ETF filings spark concerns over 'casino-type' speculation; Proposed funds are among multiple cryptocurrency ETFs filed in wake of Trump's victory
Steve Johnson - Financial Times
Three US asset managers are preparing to launch exchange traded funds investing in so-called "memecoins" linked to US President Donald Trump and his acolyte Elon Musk. The proposed funds are among a flurry of exotic cryptocurrency ETFs that could be unleashed in the US in the wake of Trump's election victory. The latest filings are likely to prove controversial, though, given that memecoins are a particular kind of digital asset that has no cash flow, business model or practical use underpinning their valuations.
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Bessent Wins Senate Confirmation to Be US Treasury Secretary; Hedge fund veteran inherits trajectory of wide fiscal deficits; Bessent faces immediate challenge in debt management
Viktoria Dendrinou and Daniel Flatley - Bloomberg
The US Senate confirmed Scott Bessent as the next secretary of the Treasury, becoming the chief economic spokesman for President Donald Trump and his sweeping agenda of tax cuts, deregulation and trade rebalancing. The former hedge fund manager won confirmation by a vote of 68 to 29 Monday. Besides the support of all Republican senators, Bessent secured the backing of one independent and 15 Democrats, in a sign the minority party might be more willing to cooperate with the administration on certain economic matters than during Trump's first term. Trump's first Treasury chief, Steven Mnuchin, garnered a single Democratic vote in his 2017 confirmation.
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Scott Bessent pushes gradual 2.5% universal US tariffs plan; Trump's Treasury secretary wants levies to rise month by month in order to give businesses time to adjust
Aime Williams and Demetri Sevastopulo in Washington - Financial Times
Donald Trump's Treasury secretary Scott Bessent is pushing for new universal tariffs on US imports to start at 2.5 per cent and rise gradually, said four people familiar with the proposal. The 2.5 per cent levy would move higher by the same amount each month, the people familiar with it said, giving businesses time to adjust and countries the chance to negotiate with the US president's administration.
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| | | | | | Exchanges | | | Euronext to acquire Nasdaq's Nordic power futures business
Euronext
Euronext (Euronext: ENX), the leading European capital market infrastructure, and Nasdaq (Nasdaq: NDAQ), a leading transatlantic market operator and global technology company, today announced the signing of a binding agreement under which Euronext will acquire Nasdaq's Nordic power futures business, subject to receipt of applicable regulatory approvals. The agreement entails the transfer of existing open positions in Nasdaq's Nordic power derivatives, currently held in Nasdaq Clearing, to Euronext Clearing, with approval of the members. Trading of power futures will be operated from Euronext Amsterdam and will be cleared through Euronext Clearing.
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Institutional interest surges as Cboe and Tuttle Capital propose new crypto ETFs to the SEC; The proposals for in-kind crypto ETF transactions and leveraged offerings highlight an evolving market as institutional interest grows.
Oluwapelumi Adejumo - CryptoSlate
Cboe has filed an amended application with the US Securities and Exchange Commission (SEC) to adjust the operational rules for Ark21 Shares Bitcoin ETF (ARKB) and 21Shares Core Ethereum (CETH) exchange-traded funds (ETFs).
According to the Jan. 27 filing, the US equities market operator has proposed introducing in-kind creations and redemptions for these funds.
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Morgan Stanley overtakes BofA as third-largest FCM by margin in 2024; Marex and Deutsche see sharpest upticks in required client margin for F&O, while Wedbush and Mizuho fall furthest
Joshua Walker - Risk.net
In 2024, the landscape of futures commission merchants (FCMs) experienced notable shifts, with some firms achieving substantial growth in margin requirements for futures and options (F&O), while others faced significant declines, analysis by Risk Quantum shows. While JP Morgan and Goldman Sachs remained firmly anchored to their respective first and second places by this metric, Morgan Stanley overtook Bank of America to end the year in the third spot with $29.5 billion in required margin - just
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Risk Management Arrangement Relating to the Capital Adjustment of Haitong Securities Co., Ltd. Stock Options Contracts
HKEX
Reference is made to the circular (Reference: MO/DT/021/25) dated 24 January 2025, trading of Haitong Securities Co., Ltd. ("HAI") Stock Options contracts will be suspended from 6 February 2025 to D+12, both days inclusive, and capital adjustment as a result of the merger will be made to the positions of HAI Stock Options contracts which exist after the market close on D+12. Accordingly, the margin intervals for HAI Stock Options class will be increased after the close of business on 4 February 2025. Please refer to the Appendix for the increased margin interval. Please be reminded that the above minimum margin rates are for your firm's financially strongest clients. Exchange Participants should set their margin requirements according to each client's individual circumstances.
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Nasdaq Announces Mid-Month Open Short Interest Positions in Nasdaq Stocks as of Settlement Date January 15, 2025
Nasdaq
At the end of the settlement date of January 15, 2025, short interest in 3,099 Nasdaq Global MarketSM securities totaled 12,402,417,655 shares compared with 12,137,206,474 shares in 3,085 Global Market issues reported for the prior settlement date of December 31, 2024. The mid-January short interest represents 2.56 days compared with 2.50 days for the prior reporting period. Short interest in 1,635 securities on The Nasdaq Capital MarketSM totaled 2,424,890,788 shares at the end of the settlement date of January 15, 2025, compared with 2,331,105,942 shares in 1,643 securities for the previous reporting period. This represents a 1.00 day average daily volume; the previous reporting period's figure was 1.00.
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| | | | | | Regulation & Enforcement | | | Wall Street asks SEC to extend timeline for US Treasury market overhaul
Davide Barbuscia - Reuters
Wall Street is asking regulators for more time to implement a rule requiring centralized Treasury clearing as banks and funds trading U.S. government bonds face a 2026 deadline.
The Securities and Exchange Commission adopted in December 2023 new rules aimed at reducing systemic risk in the $28 trillion Treasury market, the world's biggest bond market, by forcing more trades through clearing houses. The rules, which will give the agency greater visibility into the market, will be implemented in phases by June 2026.
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European Commission sets date for derivatives consolidated tape tender; Some of the groups which have already confirmed plans to bid for the bond consolidated tape are also considering participation in the derivatives tape tender, The TRADE understands.
Claudia Preece - The Trade
The European Commission (EC) has confirmed the EU derivatives consolidated tape tender process will begin in Q1 2026. The 'delegated act on derivative identifiers' highlights that this decision has been taken specifically to allow the European Securities and Markets Authority (ESMA) "enough time to specify how identifying reference data should be reported and for the necessary adjustments to IT systems". The appointment of a single consolidated tape provider (CTP) specifically concerns OTC derivatives and relevant subclasses of OTC derivatives.
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| | | | | | Technology | | | TradeStation Securities Becomes First US Broker to Launch Options Trading on TradingView; New and existing clients of TradeStation Securities and TradingView now can trade options directly from the TradingView platform
TradeStation Securities, Inc.
TradeStation Securities, Inc. ("TradeStation Securities"), an award-winning self-clearing online brokerage firm for trading stocks, options, futures, and futures options, announces that it will be the first US broker to launch options trading on TradingView, a charting and trading platform, and social network for traders and investors. "TradeStation will be the first US broker for options trading as TradingView introduces this asset class to its platform," said John Bartleman, President and CEO of TradeStation Group, Inc., the parent company of TradeStation Securities. "With the options integration, new and existing TradeStation clients can leverage direct-market access, free real-time and Level 2 data as well as Market Depth trading, all through one single connection on the TradingView platform. This collaboration reinforces TradeStation Securities' role as a catalyst for traders looking to create their ultimate trading experience."
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| | | | | | Moves | | | Sean Feeney has stepped down as head of US Options at Nasdaq, he announced on LinkedIn. ~JJL
| | | | | | Strategy | | | Retail investors bought the DeepSeek dip. Here are JPMorgan's options trades for bulls or bears.
Jamie Chisholm - MarketWatch
The latest AI-induced stock market wobble - when the Nasdaq Composite lost 3.1% and Nvidia shed 17% in a day - poses a crucial question for investors.
Was the move overdone and therefore a buy-the-dip opportunity? Or does the news of DeepSeek's low-cost software lead to a longer re-evaluation of the U.S. AI trade and the unwind of crowded positioning?
A team of analysts at JPMorgan, led by head of Americas equity derivative strategy Bram Kaplan, have provided trading suggestions for either view.
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New ETFs Bet Investors Are Way Too Careful-Even When Buying Bitcoin; ETFs that cap the cryptocurrency's upside and downside are the latest example of products that remove too much risk to actually make sense
Jon Sindreu - The Wall Street Journal
Irrationally exuberant investors who lose their shirts get a lot of attention. But there is another way to manage your money poorly: taking so little risk that you end up with little reward. Enter the Calamos Bitcoin Structured Alt Protection ETF, which started trading under the "CBOJ" ticker last Wednesday. The fund uses a combination of safe investments and options on other bitcoin vehicles to guarantee that initial backers won't lose any money over the following year, despite investing in one of the most speculative assets in existence. The flip side is that it also limits the maximum returns they will receive over this period at 11.65%.
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Nvidia-ETF Complex Faces Moment of Truth as Levered Bets Plunge; Leveraged Nvidia funds face steep selloff amid AI market rout; Retail investors have bet billions on risky momentum trades
Vildana Hajric and Denitsa Tsekova - Bloomberg
Day traders spent last year shoving billions of dollars into leveraged Nvidia Corp. ETFs in a bid to amp up their gains on the hottest stock on the planet. Now those wagers are in peril. Get-rich-quick funds that offer to amp up returns in Nvidia started the week with a record rout, after China's DeepSeek sparked a selloff in technology stocks. As the chipmaker sank, a trio of Nvidia-focused funds - led by the GraniteShares 2x Long NVDA Daily ETF (ticker NVDL) - collectively incinerated about $2 billion in value, the data show. Leveraged ETFs as a whole were hit by a $10 billion loss in Monday trading, according to an analysis by Athanasios Psarofagis at Bloomberg Intelligence.
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Nvidia Shorts Made a Killing on the DeepSeek Drop. It May Not Last.
Paul R. La Monica - Barron's
Investors who bet against Nvidia on Monday made a killing, but shorting the stock may now be tougher, making it costlier to bet against the AI chip giant.
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Behind the Ticker: WisdomTree Alternative Income Fund (HYIN)
Cboe
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| | | | | | Education | | | Implied Volatility Overstatement and Profit Targets with Strangles
tastylive (Video)
It's not always easy to take the measure of a market, whether you've been trading for a day or a decade. On this segment we look under the hood-options probabilities, volatility, trading strategies, futures, you name it-so your trading mechanics are built to manage more winners.
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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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