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Observations & Insight
When the Market's a Mood Ring: Steve Sosnick on Trump, Crypto, and Why Volatility Never Sleeps JohnLothianNews.com PALM BEACH GARDENS, Fla.-(JLN)-June 2, 2025-Steve Sosnick, the unflappable chief strategist at Interactive Brokers, has spent decades navigating the wilds of Wall Street. But at this year's Options Industry Conference, he sounded less like a market veteran and more like a storm chaser, tracking the unpredictable fronts rolling in from Washington, D.C. Watch the Steve Sosnick Video » Jim Toes - Security Traders Association Watch the Jim Toes Video » Julie Bauer - OCC Watch the Julie Bauer Video »
Lead Stories
Popular 'zero-day' options saw record share of trading volume in May as retail traders piled in; Overall option-market activity eased in May, but popular '0DTE' contracts saw their strongest monthly volume on record
Joseph Adinolfi - MarketWatch
The share of trading volume in S&P 500-linked options contracts on the verge of expiration surged to a fresh record high in May, marking the latest milestone in the growth of one of Wall Street's most popular options strategies, according to data from Cboe Global Markets.
While overall options-market activity eased last month, so-called "zero days to expiry," or "0DTE," contracts comprised more than 60% of volume in the S&P 500 complex, the highest share for any single month on record. What is more, much of the bump in activity last month was driven by retail investors, according to Cboe's Mandy Xu.
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Quant Traders That Dominate US Options Market Move in on Europe
Christian Dass - Bloomberg
While the tariff-driven market turmoil in April boosted trading on both sides of the Atlantic, Europe remains far behind. Even with talks about the end of "US Exceptionalism" and investment flows directed away from the country, Europe lacks the abundant retail demand that drives a robust, relatively transparent options market in the US. But despite the differences, in both places market makers are pushing in to service customers directly. More nimble, with more sophisticated quant models than traditional banks and comfortable hedging across markets, they already held 30% of the open interest in Euro Stoxx 50 Index listed options on Eurex in 2022, an Acuiti report found at the time. Their share is estimated to have grown further since then.
/jlne.ws/3FsXvEj
What Goes Up Must Come Down
Robert Hahn, CFA and Robert Cagliola, CFA - Cboe
"What goes up, must come down" was first stated by Sir Isaac Newton to describe his Law of Universal Gravitation. The statement applies equally well to both falling fruit and stock market fluctuations. In this article we will focus on the most important attribute of option-based strategies which is the ability to reduce volatility while remaining invested in the stock market. In particular, we will discuss our hedged equity strategy and how a hedged equity allocation can potentially improve the risk or reward profile of a portfolio.
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Wall Street Fear Index Jumps as Trade Tensions Reignite
George Glover - Barron's
Investors were feeling on edge Monday after China hit back at President Donald Trump's claim that Beijing had "totally violated" the tariff deal it brokered with Washington last month.
The Cboe Volatility Index, which tracks S&P 500 options contracts and trades under the ticker VIX, jumped 1.2 points to just under 20 in early trading. Any reading of above 20 tends to indicate relatively high uncertainty, so the fear gauge's recent movements are a sign that Wall Street is getting nervous.
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Hedge Fund Picton Buys Volatility, Fearing a New Tariff Tantrum
Layan Odeh and Derek Decloet - Bloomberg
The head of Canada's Picton Mahoney Asset Management said the global market volatility that has faded in recent weeks is likely to return, and his firm is betting on it.
Equity markets have rallied sharply since US President Donald Trump paused many of the tariffs he had announced in his "Liberation Day" speech. The S&P 500 has surged 19% since the April 8 close and just notched up its best May since 1990. The VIX Index, a volatility gauge, has tumbled. It closed Friday at 18.57, compared with its lifetime average around 19.5.
/jlne.ws/43WwTVp
Investors don't think the safest bonds of all are a sure thing anymore
Max Adams - Business Insider
A corner of the ultra-safe US Treasury market is losing its shine amid concerns about America's long-term fiscal health.
It's an increasingly worrisome situation given the importance of Treasurys as a component of long-term portfolios for millions of Americans, as well as their role as an investment safe haven during times of turbulence.
/jlne.ws/4jsYvWZ
Exchanges
CME Group Announces Record Volume, Open Interest Across Battery Metals Complex
CME Group
CME Group, the world's leading derivatives marketplace, today announced record volume and open interest across its battery metals complex. A total of 2,587 contracts were traded across battery metals futures and options on May 29, surpassing the previous record of 2,301 contracts set on February 11, 2025. Combined open interest also reached an all-time high of 64,387 contracts.
/jlne.ws/43UD38t
ICE Launches its first Futures Contracts Based on Battery Materials
ICE
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of technology and data, today announced the launch of its first futures contracts based on battery materials, expanding its energy and environmental markets - which represent the most liquid markets to trade these products - into critical minerals. ICE has launched four cash-settled battery materials contracts covering lithium hydroxide, lithium carbonate, cobalt and spodumene futures based on Fastmarkets' price assessments.
/jlne.ws/455zEFc
Regulation & Enforcement
SEC Flags Concerns on Crypto ETFs Offering Staking Rewards
Loukia Gyftopoulou, Isabelle Lee and Nicola M White - Bloomberg
A potentially watershed effort to launch US crypto exchange-traded funds that offer staking rewards is throwing up regulatory doubts, even after the funds said they received initial SEC registration approval. Issuers REX Financial and Osprey Funds are targeting to launch ETFs tracking Ethereum and Solana that offer staking exposure, which allows investors to earn rewards by pledging tokens to help operate the blockchain.
/jlne.ws/3FHG8Q1
Technology
Historical Cboe U.S. Equities PITCH data now extended
Maria Nikolova - FX News Group
Historical Cboe U.S. Equities PITCH data has been extended to provide even more historical data.
PITCH data is a daily archive of the Cboe U.S. Equities Exchanges depth-of-book, real-time feeds with complete order book transparency including every add, modify and cancel message.
/jlne.ws/4jxY8dw
Strategy
2 Options-Related Indicators Favor Bears This Week; Bulls might find frustration in the recent lack of upside movement
Todd Salamone - Schaeffer's Investment Research
Stock market participants are cautious due to fears of rising interest rates. This has investors wondering if the next major move in bonds is higher (yields lower), and if equity prices will rise as well.
Market positioning is at its most bearish since mid-February. This pessimistic extreme on bonds preceded a major short-term move lower in the 10-year Treasury bond yields from the mid-February high of 4.6% to the early March low of 4.1%.
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Carry Trades Roar Back Into Favor as Emerging Currencies Rally
Catherine Bosley and Malavika Kaur Makol - Bloomberg
Emerging market carry trades are taking off again, as currency volatility subsides amid signs President Donald Trump's aggressive tariffs may not get fully enacted. An index of carry returns - for which a trader borrows in a low-yielding currency and then invests in another offering higher returns, hit a seven-year high in late May. Asset managers have boosted long positions in developing-nation currencies in recent weeks, with those on Mexico's peso reaching a nine-month high, based on CME Group Inc. data.
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After the TACO trade, here comes the 'Trump collar.' What that means for stocks.; There's a new addition to the ever-expanding lexicon of Trump trades, says Nomura's McElligott
Jamie Chisholm - MarketWatch
Early action on Monday shows Wall Street starting the week on the back foot, as trade-war concerns once again dominate the narrative.
This may come as no surprise to Charlie McElligott, strategist at Nomura.
/jlne.ws/3T4Qr3K
Miscellaneous
The Law Firms That Appeased Trump-and Angered Their Clients; After firms struck deals to avoid punitive executive orders, some big clients decided to take their business elsewhere
Erin Mulvaney, Emily Glazer, C. Ryan Barber and Josh Dawsey - The Wall Street Journal
At a recent luncheon at Cipriani in Midtown Manhattan, a top lawyer for Citadel delivered a message to leaders of some of the country's biggest law firms. Brooke Cucinella told them that the hedge-fund company likes to work with law firms that aren't afraid of a fight. Cucinella, head of litigation and regulatory inquiries at the business headed by Republican megadonor Ken Griffin, made no mention of politics. But some of the lawyers in attendance took her remarks as reference to a controversy that has been roiling the legal industry.
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