| June 23, 2023 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Option demand explodes in June as investors use bullish bets to chase stock-market rally
Joseph Adinolfi - Morningstar
Trading in U.S. stock option contracts has surged in 2023 as retail and institutional traders have harnessed bullish call options to chase a runaway rally in U.S. stocks, market analysts told MarketWatch. As of Friday, 46 million option contracts linked to U.S. equity indexes, individual stocks and exchange-traded funds have traded hands every trading session on average this month, according to an analysis by Callie Cox, a U.S. equity strategist at eToro.
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Research Finds Retail Options Traders Bet Big, Bet Often
Svetlana Bryzgalova, Assistant Professor of Finance; Anna Pavlova, Professor of Finance, and Taisiya Sikorskaya, PhD Candidate in Finance - London Business School via Traders Magazine
As the pandemic surged, many were drawn to the markets, and options. Use of smart phone investing and apps like Robinhood increased, given ease-of-use and promise of commission-free trading. 21.3 million monthly active users flocked to Robinhood alone in late 2021, according to company statements. The world watched in fascination as GameStop stock spiked to over $80 a share in January 2021, rallied by WallStreetBets and others on Reddit. A new generation of young, tech-savvy retail investors was underway.
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Bitcoin holds $30K as bulls flaunt their advantage in Friday's $715M BTC options expiry; News of regulatory enforcement against the crypto sector fell by the wayside as the Bitcoin price rallied above $30,000, and options data suggests the trend will continue.
Cointelegraph
Bitcoin's 15% rally toward $30,300 between June 19 and June 21 caught most traders by surprise, triggering $125 million in liquidations of leveraged short futures contracts. Narrowing down the trigger for the rally is complicated, but some analysts point to the potential inflow of institutional investors if BlackRock's exchange-traded fund (ETF) application gets regulatory approval.
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The market's 'fear gauge' just hit its lowest level since January 2020: Morning Brief
Jared Blikre - Yahoo Finance
Wall Street's so-called "fear index" - the CBOE Volatility Index - fell to 12.73 Thursday, the lowest reading since January 2020. As stocks snap a three-day losing streak and return to climbing the proverbial wall of worry, the VIX is signaling the most complacency in stocks since just prior to the pandemic. It may not signal the all-clear, the low VIX reading does underscore the powerful rally U.S. large cap equities have mounted this year. While the rally was largely concentrated in growth tech names and mega cap stocks through May, cyclical sectors have joined the party since the last jobs report dropped in early June.
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| | | | | | Exchanges | | | HKEX Takes 'Asia to New York' with opening of NY office
Rick Steves - Finance Feeds
"There is immense appetite for better insight and access to Asia capital markets in the US, and in opening up an HKEX office in New York, we can better align with our clients' interests and ambitions." Hong Kong Exchanges and Clearing Limited (HKEX) has officially opened its New York office at a reception held at New York's Rockefeller Center.
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How to benefit from trading opportunities created by the Euro and Yen transition?
Eurex
Eurex introduced EURSTR futures in January 2023, followed by three-month TONA futures in May. How does the transition to new risk-free rates create opportunities for our market participants? Experts from Eurex, Osaka Exchange (OSE), Futures First, Citi and University of Portsmouth shared their views in the Eurex and OSE webcast hosted by Acuiti. Topics included finding the right strategy for the introduction of EURSTR and TONA derivatives, and if and how the divergence in financial policies between Europe and Japan will create opportunities.
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Sensex derivatives turnover scales record high of Rs 6.06 lakh
Akash Podishetti - Economic Times
The turnover of derivatives in BSE Sensex scaled a high of Rs 6.06 lakh crore on the weekly expiry of Friday to post highest single-day turnover in the exchange. In the options segment, the turnover was Rs 6.06 lakh crore, and Rs 61 crore in futures segment. The turnover jumped 77% from previous week's expiry turnover of Rs 3.42 crore. A total of 96.11 lakh contracts were traded during the day, while total open interest reached a peak of 4.93 lakh contracts before expiry.
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SEC Approves First Leveraged Bitcoin Futures ETF
Pedro Solimano - DeCrypt
The U.S. Securities and Exchange Commission (SEC) has approved the first leveraged Bitcoin futures exchange-traded fund (ETF) on Friday. Volatility Shares 2x Bitcoin Strategy ETF (BITX) is scheduled to launch on the Chicago Board Options (CBOE) BZX Exchange next Tuesday, June 27.
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| | | | | | Regulation & Enforcement | | | Hong Kong regulatory update: recent enforcement actions and regulatory enhancements highlighted in the SFC's annual report 2022-23
Sidley Austin LLP
On 21 June 2023, Hong Kong's Securities and Futures Commission (SFC) issued its 2022-23 Annual Report, covering key regulatory developments and providing insight into the latest enforcement trends during the financial year of 2022-23. The major enforcement trends and themes reflected in the SFC's 2022-23 Annual Report are summarized in the tables and sections below.
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| | | | | | Strategy | | | The Irrefutable Beauty of Options Delta
Dr Jim Schultz - tastylive
Experienced options traders appreciate the predictive power of delta. Here's why ... Options delta gauges price movement, given the underlying stock movement. But options delta can also be used to approximate the probability of the options expiring in-the-money. Or it can measure directional bias at both the position level and the portfolio level. In the world of trading, for every gimme there's a gotcha, and Delta's relationship with return provides a classic example.
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| | | | | | Education | | | Options Glossary For Income Investors
John Dobosz - Forbes
Option trading comes with a fair amount of specialized lingo. Before you start putting in orders to buy and sell, here are some terms you should know, with definitions provided by the Chicago Board Options Exchange. Ask Price: The price at which a seller is offering to sell an option or stock. Assignment: The receipt of an exercise notice by an option writer (seller) that obligates him to sell (in the case of a call) or purchase (in the case of a put) the underlying security at the specified strike price. At-the-money: An option is "at-the-money" if the strike price of the option is equal to the market price of the underlying security. Automatic Exercise: A protection procedure whereby the Options Clearing Corporation attempts to protect the holder of an expiring in-the-money option by automatically exercising the option on behalf of the holder.
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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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