| October 18, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | |
Using Options for Risk Management and Protective Puts; Michael J. Oyster Breaks This Down and More in His Full Interview With JLN's Alex Teng
JohnLothianNews.com
In this Options Discovery full interview, JLN's Alex Teng sits down with Michael J. Oyster from Options Solutions and discusses how options can be used for risk management and navigating a declining stock market. Oyster also discusses his background and how to implement a put protection strategy, which can give investors downside protection by limiting their upside gains.
Watch the video »
| | | | | | Lead Stories | | | Options Traders Stack Up Record Bullish Bets on Major Bond ETFs (TLT, LQD)
Katherine Greifeld - Bloomberg
Exchange-traded fund investors are preparing for the possibility that peak bond pain has passed.
Open interest for bullish call contracts is close to an all-time high for the $24 billion iShares 20+ Year Treasury Bond ETF (ticker TLT), while the fund's put-call ratio is at the lowest since 2003. It's a similar story for the $32 billion iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD), where call open interest is also hovering near record highs while the ratio of bearish puts to calls has dropped to the lowest level in a year.
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S&P 500: Stocks Volatility Prompts JPMorgan, Morgan Stanley to Shift Tone
Isabelle Lee - Bloomberg
With their wild swings and reversals exacerbated by a Federal Reserve bent on curbing inflation, US equities have been anything but simple to call this year, a challenge exemplified just this week by two of Wall Street's most prominent strategists.
Morgan Stanley's Mike Wilson says US stocks are ripe for a short-term rally given the absence of an earnings capitulation. It's an unusual positive call from a long-time bear who correctly foresaw this year's slump.
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Wall Street's Rates, FX Traders Save Quarter With Revenue Surge
Jennifer Surane and Hannah Levitt - Bloomberg
Rates and currencies traders just handed Wall Street's trading desks their best third quarter ever.
Fixed-income trading revenue at the five largest US banks surged 22% to $15.8 billion in the period, trouncing analyst estimates. That, combined with a $10 billion equities-trading haul, handed the firms their best third quarter for the business on record.
/jlne.ws/3zdxGSr
European fund flows demonstrate strong shift to ETFs
Dominic Lawson - Financial Times
European exchange traded funds have had net inflows this year even as open-ended mutual funds have suffered net outflows, a trend experts say is part of a long-term shift towards passive investment.
Open-ended mutual funds suffered outflows every month from February to August, while ETFs have recorded inflows every month except June and July, according to Morningstar Direct data.
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U.S. stocks have seen volatility on Fridays explode to record levels this year
Joseph Adinolfi - MarketWatch
Since the start of the year, volatility during Friday trading sessions has exploded, transforming what was once a quiet day for markets into one of the most harrowing parts of the week for equity investors, according to an analysis from Bespoke Investment Group.
For example, Friday's 2.4% pullback for the S&P 500 SPX, 0.76% was the fourth consecutive decline of 1% or more to occur on a Friday.
/jlne.ws/3s5YTSY
Wild Currency Swings Take $34 Billion Bite From Company Profits
Mary Biekert and Bailey Lipschultz - Bloomberg
A surging dollar and weakness abroad whacked North American corporate profits by an unprecedented amount in the second quarter, foreshadowing an even worse hammering this earnings season.
Currency volatility cost North American companies $34.3 billion in the April to June period, the highest loss on record in data going back to 2013, according to Kyriba Corp., a treasury-management software company.
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The bear with no bite: Why the VIX is not 50 - Alastair MacLeod
Alastair MacLeod - Livewire
While it may not feel like it, the market drawdown this year has been relatively calm and orderly, at least in so far as the foremost equity 'fear gauge' is concerned - the VIX index.
The VIX Index measures the S&P500 equity market volatility and is commonly used by investors to measure market sentiment. As shares are typically much more volatile when markets are falling, spikes in the VIX coincide with periods of acute market fear. Hence the moniker 'Fear Index'.
/jlne.ws/3s5npU9
| | | | | | Exchanges | | | Leaders in Trading 2022: Meet the nominees for the.... Outstanding Dark Trading Venue; Learn more about the five firms shortlisted for our Editors' Choice Award for Outstanding Dark Trading Venue this year: including Cboe BIDS Europe, Instinet Blockmatch, Liquidnet, Goldman Sachs' SIGMA X MTF and SwissatMid.
Annabel Smith - The Trade
Next up in our series of introductions to our distinguished nominees for Leaders in Trading 2022, we bring you the shortlist for the Editors' Choice Outstanding Dark Trading Venue award. This year brings you a star-studded line up including Cboe BIDS Europe, Instinet Blockmatch, Liquidnet, Goldman Sachs' SIGMA X MTF and SwissatMid. Let's take a look at their activities over the past year...
/jlne.ws/3SbJXNM
OCC's Employee Network Groups Nominate Nonprofits to Receive Scholarship Donations
OCC
In 2022, OCC partnered with our Employee Network Groups (ENGs) to nominate nonprofit organizations to receive scholarship donations. These donations demonstrate our stewardship and integrity value, representing our commitment to increasing access to education for underrepresented communities and making a positive impact where we live and work. Learn more about our 2022 scholarship donations below.
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| | | | | | Strategy | | | One Trading Strategy Is Winning Big in This Nasty Year for Stocks; Dispersion trade up as single stocks swing, VIX stays muted; Subdued demand for portfolio hedges is behind volatility quirk
Justina Lee - Bloomberg
A strange thing keeps happening in this nightmare year on Wall Street: Seemingly surefire bets that outsize volatility will engulf equity indexes keep misfiring, even as those riding turmoil in single stocks pay off handsomely. That's proving a boon for a niche strategy known as dispersion trading, with nimble money managers netting double-digit gains by taking advantage of quirks in the world of equity derivatives.
/jlne.ws/3VKUa6S
Sell S&P 500 Calls to Fund Bullish Options on China Stock Market, Goldman Says
Abhishek Vishnoi - Bloomberg
Goldman Sachs Group Inc. said investors should sell S&P 500 Index calls and fund buying of the same options on the Hang Seng China Enterprises Index to position for a likely catch-up in battered China-related assets.
"Sentiment on China-exposed assets has remained subdued this year and did not mirror the risk appetite rebound during the summer," undershooting a measure of investor mood for global growth, strategists including Christian Mueller-Glissmann wrote in a note dated Oct. 17.
/jlne.ws/3eNtLV4
| | | | | | Education | | | The Options Strategy Helping Some Investors Beat The Market This Year
Eric Wallerstein - WSJ
A commonly used options strategy has helped soften the stock-market blow this year for some investors.
So-called covered calls are used to hedge against losses in stocks that an investor already owns. The investor sells a call option and pockets the premium income. This can help reduce a loss if the underlying stock falls in value since the option contract will expire worthless.
/jlne.ws/3TdW0vb
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| | | Jeff Bergstrom
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