| January 18, 2018 | | | | | Spencer Doar
Associate Editor
John Lothian News | |
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| | | | Observations & Insight | | | You Can't Rain On Our Parade: Cboe's Big 2017 Includes Bitcoin Futures. Can It Overcome Regulatory, Margin and Volatility Headwinds?
Jim Kharouf - John Lothian News
To hear Cboe Global Markets Chairman and CEO Ed Tilly tell it, his exchange group is firing on all cylinders and adding new ones to the engine. The exchange boasts the top US equity options market and has a lock on volatility products with the VIX futures and options and related exchange traded products. Cboe now has the top pan-European equity market and the second ranked US stock market, as well as a burgeoning FX business. As the migration of its exchanges onto the Bats trading platform continues, with Cboe Futures Exchange due up next month, its technology is taking a major step forward.
jlne.ws/2mLREhS
****SD: In case you missed it.
| | | | | | Lead Stories | | | A Hint of Angst May Be Emerging as the S&P 500 Rallies With the VIX
Cecile Vannucci - Bloomberg
As the market keeps rallying, rising hedging costs signal investors may be growing more anxious.
The Cboe Volatility Index, a measure of options prices, has climbed 17 percent this week through Wednesday as the S&P 500 hit yet another record, boosted by earnings optimism. Should the gains be maintained, it'd be the second week in a row that the gauges moved in tandem, something that hasn't happened over a similar stretch since August 2016.
jlne.ws/2FQmca9
****SD: Cboe's Russell Rhoads had a quick video update on the VIX and S&P moving in tandem - here's the link again.
Credit Suisse Latest To Predict Volatility Stays In a Range
Mark Melin - ValueWalk
Add Credit Suisse's Mandy Xu, head of equity derivatives strategy, to the list of those inclined to think volatility will generally remain in a trading range in 2018. Like many derivatives thinkers, however, she doesn't look at the world from the standpoint of absolutes, but rather probabilistic outcome potentials. It is here where she considers a volatile world that could upset tranquil markets.
/goo.gl/KRyzsS
Arcane Oil Options Indicator Flashes Warning as Bulls Pile In
Alex Longley - Bloomberg
'Breakeven' collapse seen indicating price volatility too low Occurs amid heightened geopolitical tensions and bullish run Oil's recent surge to $70, buttressed by an unprecedented flood of bullish bets, is getting options traders excited about an arcane measure of volatility that they say points to an overheated market.
/goo.gl/nEX4nY
****SD: Seeing/hearing "arcane" is always good to pique some interest. Who gets consulted on the arcane options Greeks in this case? Why, Thibaut Remoundos, of course! A fitting name for arcane expertise.
Chicago Code: A Profile of DRW's Seth Thomson
Anthony Malakian - WatersTechnology
Chicago has become the epicenter of bitcoin mania. The Chicago Mercantile Exchange and Cboe Global Markets were the first exchanges to launch bitcoin futures at the end of 2017. And one of the largest traders of cryptocurrencies is Chicago's own DRW. Since the firm launched in 1992, one of its key principles has been diversification. That's where DRW's chief information officer, Seth Thomson, comes into the picture.
/goo.gl/wAVtQa
****SD: He's a comic book guy! Owns X-Men back to 1960s and hosted a cable access show for seven years covering comic books. And want to know the last thing I spoke to him about? Ping pong. Interesting fellow.
BNY Mellon Launches FX Derivatives SI
Shanny Basar - Markets Media
BNY Mellon said the implementation of new European Union regulation has been relatively smooth for foreign exchange trading as the firm launched a systematic internaliser for FX derivatives.
/goo.gl/fVJw3P
Low Economic Volatility Won't Keep Markets Calm Forever; Stability itself can create instability when investors become too complacent.
Ben Carlson - Bloomberg View
Many predicted that the beginning of last year would finally bring an uptick in volatility. Instead, 2017 was one of the least volatile periods on record for the stock market. The S&P 500 was up every month. The largest peak-to-trough drawdown was slightly more than 3 percent, the lowest on record since at least the mid-1990s.
/goo.gl/uB2TK4
| | | | | | Exchanges and Clearing | | | Cboe Conducts First Settlement of Cboe Bitcoin Futures
Cboe
Cboe Global Markets, Inc., one of the world's largest exchange holding companies, today announced the settlement of January expiry Cboe bitcoin (XBT) future.
The settlement price was $10,900.00, as determined by the 4:00 p.m. ET Gemini Exchange bitcoin auction.
/goo.gl/v6s7Uw
| | | | | | Regulation & Enforcement | | | Crypto Derivatives Targeted by EU Regulator Weighing Curbs
Boris Groendahl, Donal Griffin and Silla Brush - Bloomberg
Europe's top markets watchdog may curb trading in derivatives in Bitcoin and other cryptocurrencies as part of a broader crackdown on risky financial products available to retail investors.
jlne.ws/2FR2cEg
Florida man gets prison for trading on tip about Gilead deal
Nate Raymond - Reuters
A Florida man was sentenced on Wednesday to one year in prison for engaging in insider trading based on a tip he received from an ex-Morgan Stanley broker about Gilead Sciences Inc's planned $11.2 billion purchase of Pharmasset Inc in 2011, prosecutors said.
/goo.gl/sbcx37
****SD: Hear a little bird tell you something, buy far OTM calls, profit, get caught, Bloomberg's Matt Levine makes fun of you, fine/prison time follows. The "wash, rinse, repeat" of insider trading.
| | | | | | Technology | | | Time to shine a light on opaque market data pricing; Large institutions have the ability to buy 'premium' data packages, while those with fewer financial resources are left by the wayside
Roger Rutherford - Financial News
Is there a need for greater transparency in the way exchange groups and trading platforms charge for providing market data? A group of 24 trading institutions, including banks and asset managers, certainly think so. They have written to the Securities and Exchange Commission, requesting exchanges reveal their profit margins for market data products.
/goo.gl/5TBDrW
Intercontinental Exchange and Blockstream Launch Consolidated Data Feed for Cryptocurrencies
Digital Journal
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, and Blockstream, a leader in blockchain technologies and financial cryptography, announced today the launch of the Cryptocurrency Data Feed. ICE Data Services' new feed offers real-time cryptocurrency information and will initially include data from more than 15 cryptocurrency exchange venues globally. The exclusive agreement between ICE Data Services and Blockstream offers extensive coverage of prices and order book data for bitcoin and several other leading cryptocurrencies.
jlne.ws/2FQeYCX
| | | | | | Strategy | | | Is Resurgent Dr. Copper About to Relapse?
Erik Norland - CME Group
If one looks at the price of copper (Figure 1) and the implied volatility on its options (Figure 2), one might think that the metal - often referred to as Dr. Copper for its reputation as a leading prognosticator of economic health because of its widespread applications -- has returned to robust health after a bad spell from 2011 to 2015. Recently, the price has been soaring, and the implied volatility low. Fundamentally, copper looks good. The global economy is expanding robustly and growth in China, copper's single-most important market, stopped slowing two years ago. A peek below the surface, however, shows that traders have concerns that this benign situation may not last, and 2018 could prove those concerns to be valid.
/goo.gl/XDg3FP
Look Out, Bitcoin Short-Sellers! Here's One Sign the Rout May Be Ending
Avi Salzman - Barron's
Bitcoin prices plunged more than 30% in less than two days between Monday and Wednesday, briefly falling below $10,000 on Wednesday morning for the first time since early December. The cryptocurrency had rebounded to $11,612 at 8:19 a.m. Thursday morning, but it remains more than 40% off its high.
/goo.gl/pVugBz
****SD: From LedgerX's Paul Chou - "We keep track very closely of the put-call ratio. Since we started this in October, the put-call ratio was typically three puts traded for every seven calls, so about 0.4 as a ratio. Typically, that's seen as very bullish. A week and a half ago, that almost inverted. We realized there were about six puts for every four calls that were traded. That's a 1.5 ratio, which many people see as very bearish. So I think there was some kind of nervousness going into the move below $10,000."
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