| January 23, 2024 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | Yesterday, OCC (Options Clearing Corporation) announced changes in its leadership. Craig Donohue, the executive chairman, has now assumed the role of chairman of the board of directors in what was described as a transition. Simultaneously, CEO Andrej Bolkovic has become a member of the board. Furthermore, Roland Chai, an executive from Nasdaq, has also joined the board. Chai replaced Meyer (Sandy) Frucher, the former PHLX chairman and CEO and Nasdaq vice chairman, who joined the OCC board in 1998 and was the board's longest serving member. ~JJL
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Long Put, Buying Put Options - Term of the Week
JohnLothianNews.com
This video explores the basics of a long put option contract.
Watch the video »
| | | | | | Lead Stories | | | Options Traders Earn Quick 1,000% on ADM Stock Plunge
David Marino and Michael Hirtzer - Bloomberg
Traders who put on a massive bearish options bet earlier this month on crop trading giant Archer-Daniels-Midland Co. are sitting on more than $17 million in profits. Two weeks before ADM's shares plunged the most ever following Sunday's announcement that it placed chief financial officer Vikram Luthar on leave and cut its earnings outlook pending an accounting probe, a trader or traders bought put options expiring in February and March.
/jlne.ws/3S7CGAC
Why Aren't There Options on the New Bitcoin ETFs Yet?
Alexander Osipovich - The Wall Street Journal
Some crypto traders have been wondering when they'll be able to trade options on the new spot bitcoin exchange-traded funds that started trading earlier this month. The short answer: It might be a while.
Wall Street can move fast in listing options tied to popular new ETFs. When the first bitcoin-futures ETF started trading in October 2021, it was only a few days before put and call options on the new ProShares Bitcoin Strategy ETF appeared.
/jlne.ws/47MbuNp
Why China Is Trying to Curb Short Selling After Stock Rout
Bloomberg News
As Chinese shares tumble, the country's largest stockbroker, which is state-owned, is seeking to stem the slide by suspending short selling for some clients in mainland markets. The move follows a series of market interventions by the authorities - including state buying of bank shares - that failed to halt the decline. More than $6 trillion has been wiped off the market value of Chinese and Hong Kong stocks since a peak in 2021, with history showing that short-selling restrictions usually don't provide a long-term boost.
/jlne.ws/3OdxfPw
China Snowballs and Their Role in This Year's Stock Selloff: Q&A
Bloomberg
Chinese stocks' brutal start to the year is being at least partly blamed on the impact of a relatively new financial derivative known as a snowball. The products are tied to indexes, and a key feature is that when the gauges fall below built-in levels, brokerages will sell their related futures positions.
/jlne.ws/3Hwn9Fo
Founder of Top Chinese Hedge Fund Admits Mistakes After Losses
Evelyn Yu - Bloomberg
The boss of a top macro hedge fund in China has publicly accepted the blame for wrong-way bets on a speedy Chinese recovery, after her macro fund lost as much as a quarter of its value. Li Bei, founder of Shanghai Banxia Investment Management Center, said her flagship Banxia Macro Fund has outperformed Chinese stock markets this year, but still registered a maximum drawdown of 25% from a peak in the middle of last year, the worst of her career, according to a post on WeChat on Tuesday.
/jlne.ws/3OdGLly
The increasing complexity of modern leverage raises risks
Satyajit Das - Financial Times
With the end of an era of cheap money, concerns over the leverage that has been built up in the financial system over years is rising. But it is not only the quantum of debt. Unlike amplifying returns through simple borrowings to fund an asset purchase, modern leverage is complicated by five factors that increase the risk.
/jlne.ws/42qGAcF
Bitcoin price falls 15% following launch of ETFs
Scott Chipolina - Financial Times
Bitcoin has lost 15 per cent of its value over the past two weeks, as some investors use the much-hyped launch of bitcoin exchange traded funds earlier this month to take profits and exit their holdings of the volatile cryptocurrency.
The price of bitcoin sank as much as 3 per cent on Tuesday, dipping below $39,000 for the first time since early December, before recovering slightly in afternoon trading.
/jlne.ws/3Og8Rwm
Wall Street is already weighing potential market impact of a Trump presidency
Vivien Lou Chen - MarketWatch
With the U.S. presidential election still more than nine months away, Wall Street is weighing in on the possibility of a Donald Trump return to the White House and is mapping out the potential reactions that could unfold in financial markets.
/jlne.ws/3OfiJq6
World's largest hedge funds record bumper year of profits, research shows
Karen Gilchrist - CNBC
The world's top hedge funds raked in record profits last year amid a resurgence in stock markets, new analysis showed.
The 20 leading funds made $67 billion in investor profits in 2023, up from the $65 billion recorded during the pandemic-era rally of 2021, according research Monday from LCH Investments, a fund of hedge funds. That's also around triple the $22.4 billion fund managers earned for investors in 2022.
/jlne.ws/3u49Ngu
| | | | | | Exchanges | | | OCC Announces Updates to Board of Directors; Executive Chairman Craig Donohue transitions to Chairman; OCC CEO Andrej Bolkovic and Nasdaq Executive Roland Chai join Board
OCC
OCC, the world's largest equity derivatives clearing organization, today announced the following updates to its Board of Directors: Craig Donohue, OCC Executive Chairman since 2014, has transitioned to Chairman while OCC Chief Executive Officer, Andrej Bolkovic, has joined the board. In Donohue's continuing role as Chairman of the Board, he will remain integrally involved with oversight and governance at OCC. OCC's Board of Directors has appointed Roland Chai, Nasdaq's President of European Market Services.
/jlne.ws/48LmXOE
Clay Formulates Global Blueprint for Cboe Derivatives
Shanny Basar - MarketsMedia
Catherine Clay has just finished her first 100 days in the newly created role of global head of derivatives at Cboe Global Markets. Her 100-day plan included a listening tour where the resounding message was that overseas investors want access to US derivatives markets. Clay began her career as an options trader and joined Cboe in 2015. She was previously global head of data and access solutions at Cboe and took on her new role in October 2023. David Howson, global president of Cboe, said in a statement in October that Clay successfully led the global expansion of Cboe's data and access solutions business. He added: "Her track record at Cboe, coupled with her depth and breadth of experience in the trading industry and derivatives space specifically, make her the ideal leader to assume this new position."
/jlne.ws/3HxIMFv
CME Group and DTCC Launch Enhanced Treasury Cross-Margining Arrangement, Enabling Capital Efficiencies for Clearing Members
CME Group and DTCC
CME Group, the world's leading derivatives marketplace, and The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, today announced their enhanced cross-margining arrangement has gone live, enabling capital efficiencies for clearing members that trade and clear both U.S. Treasury securities and CME Group Interest Rate futures.
/jlne.ws/47RO49j
A hybrid approach to FX efficiency
Eurex
Regulatory changes are increasing the cost of managing OTC FX portfolios. Eurex's Jens Quiram, Global Head of FIC Derivatives and Repo Sales, and Lee Bartholomew, Global Head of FIC ETD Product Design, explain how a hybrid approach is helping banks and buy-side clients leverage the benefits of listed, cleared FX derivatives while maintaining bilateral OTC relationships as a better way to manage exposures.
/jlne.ws/3S8fLF7
| | | | | | Strategy | | | The world's most accurate economist told us his forecasts for the US economy in 2024, the biggest risks he's watching, and a trade to take advantage of
Mark Reeth - Business Insider
It hasn't been easy to anticipate the economy's moves lately. The last four years alone have brought enough twists and turns to fill an economics textbook: a pandemic, supply-chain snafus, inflation, easy then restrictive monetary policies, and much more.
/jlne.ws/3vME3wW
Theta Decay in Options Trading: Consider These 3 Strategies
TD Ameritrade Ticker Tape
Got a little time? Interested in options trading strategies that target the passage of time? This article is for you.
Option traders know there are two ways for an options position to profit:
- When a long option goes up in value
- When a short option goes down in value
If the option moves in the opposite direction, the position loses money. The same is true of spreads, which are made up of more than one leg, but one must look at the net value of the trade.
/jlne.ws/4b9h9A3
Being Directional in 0 DTEs
tastytrade (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 hoodâoptions probabilities, volatility, trading strategies, futures, you name itâso your trading mechanics are built to manage more winners.
/jlne.ws/3SEi1pn
Behind the Ticker: Australian Ethical High Conviction Fund (AEAE)
Cboe (Video)
/jlne.ws/47LETaD
| | | | | | Events | | | The World Federation of Exchanges (WFE) is hosting the #WFEClear Conference in Madrid from March 19th to 21st, with SIX and BME | Bolsas y Mercados Espanoles as the hosts. This event will bring together policy-makers, WFE member CCPs, derivatives exchanges, academics, and industry stakeholders worldwide. The conference will explore crucial industry matters, addressing the future of central clearing amidst regulatory reforms, market structure changes, and technological advancements. Topics of discussion include procyclicality, margin preparedness, DLT, financial resource requirements, and third-party risk management. Distinguished speakers from organizations like IOSCO, ESMA, the U.S. CFTC, Bank of England, BIS's CPMI, and the Federal Reserve Bank of Chicago will share their insights alongside leaders from member exchanges. ~JJL
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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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Editor
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