| | | | | | | February 28, 2025 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Nvidia Decline to a Five-Month Low Is Day's Biggest Options Bet
Bernard Goyder and David Marino - Bloomberg
Worries about the growth outlook for Nvidia Corp., the chipmaker at the center of the AI spending boom, pushed shares to a three-week low on Thursday. And someone just wagered that a deeper slide is in store.
Between 2 p.m. and 2:40 p.m., a trader bought more than 300,000 contracts wagering that Nvidia's shares would drop to $115 by March 7 - a move that implies a 12% decline from Wednesday's close. The last time shares traded at this level was in mid-September.
It was the most-active options contract on US exchanges Thursday.
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Wall Street's Risk Takers Are Staging a Retreat
Simon Kennedy, Lu Wang, and Garfield Reynolds - Bloomberg
The shortest month is ending with long faces among those investors who had hoped 2025 would reward risk-taking.
As fear replaces greed across trading desks, the S&P 500 is now down for the year. On the flip side, Treasuries have extended their best start to a year since 2020. Animal spirits are also in retreat in crypto, and stocks in Asia and Europe had rocky days.
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Extremely fearful stock-market sentiment shows investors scare easily right now; The S&P 500 is barely off an all-time high, but sentiment shows 'fear has set into the collective mood': Bespoke Investment Group
William Watts - MarketWatch
In an uncanny twist, fear is running high among stock-market investors, despite the S&P 500 sitting not far off its all-time high.
"What happened to sentiment? Everywhere you look, fear has set into the collective mood," analysts at Bespoke Investment Group wrote in a Thursday note, running down a growing list of indicators reflecting rising fearfulness.
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BlackRock, Fidelity Challenge Hedge Funds With Trend-Chaser Bets
Justina Lee and Lu Wang - Bloomberg
Trend-chasing hedge funds are facing a fresh wave of competition from the ETF world, as asset managers make their latest push to open up strategies to the masses that were once reserved for the financial elite. BlackRock, Invesco and Fidelity have all recently filed to launch so-called managed futures ETFs, which use derivatives to surf momentum across a variety of asset classes. By adapting to changing market conditions with their systematic models, these funds aim to act as a bulwark against pullbacks in traditional portfolios.
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Indian stocks' worst run in 29 years, wiping $1 trillion in wealth, may yet have legs
Bharath Rajeswaran, Vivek Kumar M and Indranil Sarkar - Reuters
India's NSE Nifty 50 is set for its fifth straight monthly loss - its longest such streak since 1996 - making India the worst performing global market, with investors and derivative markets signalling the pain is likely to linger.
Weak earnings, persistent foreign outflows and uncertainty regarding U.S. tariffs have dragged the Nifty about 15% lower from its September peak, eroding nearly 85 trillion rupees (nearly $1 trillion) in investor wealth.
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Trump-Media ETF With Double Leverage Is Coming for Day Traders
Isabelle Lee and Vildana Hajric - Bloomberg
An exchange-traded fund offering double the returns of the volatile Trump Media & Technology Group Corp. is set to start trading as early as next week, in the first such product riding the social-media company.
The T-Rex 2X Long DJT Daily Target ETF, which uses derivatives to deliver two times the daily performance of the stock, is slated for its Wall Street launch under the ticker DJTU, according to Matt Tuttle, who filed for the product. The ETF would carry a 1.05% expense ratio.
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| | | | | | Exchanges | | | Crypto Trading Platform BitMEX Is Looking for a Buyer: Sources; BitMEX appointed boutique investment bank Broadhaven late last year to assist with the sales process, according to sources.
Ian Allison, Will Canny - CoinDesk
BitMEX, the cryptocurrency exchange and derivatives trading platform co-founded in 2014 by Arthur Hayes, is looking for a buyer, according to two people with knowledge of the plans. The storied exchange, which arguably made perpetual futures the most popular product among leverage-hungry crypto traders, appointed boutique investment bank Broadhaven Capital Partners late last year to assist with the sales process, the people said.
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CME Group to Launch Solana (SOL) Futures on March 17
CME Group
CME Group, the world's leading derivatives marketplace, today announced plans to launch Solana (SOL) futures on March 17, pending regulatory review. Market participants will have the choice to trade both a micro-sized contract (25 SOL) and a larger-sized contract (500 SOL).
"With the launch of our new SOL futures contracts, we are responding to increasing client demand for a broader set of regulated products to manage cryptocurrency price risk," said Giovanni Vicioso, Global Head of Cryptocurrency Products at CME Group. "As Solana continues to evolve into the platform of choice for developers and investors, these new futures contracts will provide a capital-efficient tool to support their investment and hedging strategies."
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HKEX to Introduce New Stock Option Classes
HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce today (Friday) the launch of six new stock option classes effective on Monday, 17 March 2025. In 2024, HKEX's derivatives market saw a 15 per cent increase in average daily volume (ADV), reaching a record of 1,550,593 contracts. Notably, Stock Options were one of the most actively traded products, with ADV hitting a record of 720,297 contracts and the addition of weekly expiries for selected contracts in November 2024.
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Notice on Expanding the Investment Scope of Qualified Foreign Investors in Commodity Futures and Options
Shanghai Futures Exchange
To all concerning parties: To facilitate the further participation of Qualified Foreign Institutional Investors and RMB Qualified Foreign Institutional Investors (hereinafter collectively referred to as "Qualified Foreign Investors", or QFIs) in the trading of commodity futures and options of Shanghai Futures Exchange (SHFE), SHFE is hereby notifying the following matters:
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Shanghai International Energy Exchange has released its Circular on Expanding the Investment Scope of Qualified Foreign Investors in Commodity Futures and Options
Shanghai Futures Exchange
Shanghai International Energy Exchange has released its Circular on Expanding the Investment Scope of Qualified Foreign Investors in Commodity Futures and Options as follows: With the approval of the China Securities Regulatory Commission (CSRC), starting from March 4, 2025 (i.e. from the continuous trading session on March 3, 2025), Shanghai International Energy Exchange (INE) will expand the investment scope of Qualified Foreign Institutional Investors and RMB Qualified Foreign Institutional Investors (hereinafter collectively referred to as Qualified Foreign Investors, QFI) to include the following commodity futures and options contracts:
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SFC proposes to relax position limits for key exchange-traded derivatives
SFC
The Securities and Futures Commission (SFC) today launched a consultation proposing to increase the position limits for exchange-traded derivatives based on the three major stock indices in Hong Kong to keep pace with market development. To facilitate hedging activities of market participants, the proposals will lift the current position limits for the futures and options contracts by 50% to 15,000 position delta for Hang Seng Index, 108% to 25,000 position delta for Hang Seng China Enterprises Index, and 43% to 30,000 position delta for Hang Seng TECH Index (Note 1).
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| | | | | | Regulation & Enforcement | | | SEC again delays Ether ETF options on Cboe; The agency has postponed a final ruling on the exchange's proposal until May 2025.
Alex O'Donnell - CoinTelegraph
The US Securities and Exchange Commission has once again extended its deadline for deciding whether or not to permit Cboe Exchange to list options tied to Ether exchange-traded funds (ETFs).
The agency has given itself until May to make a final decision to approve or disapprove of Ether ETF options trading on the US exchange, according to a Feb. 28 regulatory filing.
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State Street, Apollo's Private Credit ETF Raises SEC Concern
Carmen Arroyo and Silas Brown - Bloomberg
The US Securities and Exchange Commission expressed concerns over a much-anticipated private credit exchange-traded fund from Wall Street giants State Street Corp. and Apollo Global Management Inc., asking the firms for more information in a letter Thursday.
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EU racing to comply with active account rules; Industry wants simpler route to exemptions ahead of 'challenging' deadline for new clearing regime
Paulina Pielichata - Risk.net
The schedule for complying with the European Union's new regime governing the location of derivatives clearing poses challenges for the industry and regulators alike. The rules require eligible EU firms to maintain an operational active account for derivatives clearing onshore, from June 24 this year. "People are still very much in the design phase of what they want to do," said Gaspard Bonin, deputy global head of derivatives clearing and execution at BNP Paribas.
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| | | | | | Strategy | | | A Hedging Strategy for Nervous Investors
Steven M. Sears - Barron's
Stocks have risen for so long, with so few interruptions, that a little market weakness creates lingering investor unease, much like a bad virus that won't go away.
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Ether options traders brace for March slump, hedge against deeper losses
Brian McGleenon - The Block
Ether's volatility surged this week, catching crypto-native options traders off guard and forcing many to adjust their positions for further downside risk.
The shift in the market's volatility structure, particularly the rapid rise in implied volatility (IV), has significantly altered the landscape for derivatives traders, who are now hedging with a more cautious stance as bearish sentiment intensifies as March approaches.
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U.S. stocks reverse, should 'Trump put options' take effect?
Binance
Bank of America strategists stated that if the S&P 500 index (SPX) completely reverses its gains after the election, it will trigger investor expectations for U.S. President Trump to take intervention measures to support the market.
This month, the U.S. benchmark stock index has fallen nearly 3%, partly due to market concerns that Trump's proposed tariff measures could trigger a global trade war. Currently, the S&P 500 index is only about 1% away from the closing level of 5783 points on November 5, the day of the presidential election last year. According to data compiled by Bloomberg, about half of the S&P 500 index components have been in decline since election day.
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Approximate risk parity with return adjustment and bounds for risk diversification
Viraat Singh and Ali Hirsa - Risk.net
Traditional risk parity provides a way of diversifying a portfolio while preventing an excessive concentration of risk, providing a way to construct portfolios with a good risk diversification. The volatility of the risk-parity portfolio lies somewhere between the minimum variance and 1 / n portfolios, which have been studied extensively. While risk-parity portfolios or equal risk contribution (ERC) portfolios are easy to compute and implement, they depend only on the covariance matrix of the asset universe and are agnostic to the assets' returns.
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| | | | | | Miscellaneous | | | The relativity of the fractional Gamma Clock; Bank of America quant expands his Gamma Clock model with a fractional Brownian motion
Lyudmil Zyapkov - Risk.net
The bivariate Gamma Clock model introduced a novel technique of exposing the relative nature of the passage of time in financial markets. Here Lyudmil Zyapkov overlays the construction of a stochastic volatility model based on two correlated Gamma processes with a fractional Brownian motion, the long-term memory of which is conducive to reflecting the market-observable phenomenon of volatility persistence.
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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
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| | | Jeff Bergstrom
Editor
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