| August 07, 2024 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | Cboe Global Markets today announced plans to launch options on VIX futures to expand their volatility product suite. The new options, based on front-month VIX futures, aim to provide a new tool for managing market volatility and meet global demand for hedging. These CFTC-regulated options will be available on October 14, 2024, pending regulatory review, and will allow more market participants to express views on equity market volatility. ~JJL
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Agricultural Futures: Navigating the Fields: Futures Discovery EP 12
JohnLothianNews.com
Today, we're delving into the intricate world of Agricultural Futures-a realm shaped by the rhythm of nature and the pulse of global markets. In this episode, we'll explore the quantitative challenges that traders face in the real world. It's not just about numbers on a screen; it's about the unpredictable nature of weather, critical data in crop reports, and the global dance of trade policies.
Watch the video »
Steve Sosnick of Interactive Brokers Discusses Trends and Risks in the Options Market at the Asheville Conference
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Former ABN AMRO Executive Mike Dennis Discusses Market Trends and Opportunities in Crypto and Fixed Income at Options Conference
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| | | | | | Lead Stories | | | Traders spurn zero-day options in this week's market tumble
Saqib Iqbal Ahmed - Reuters
Investors avoided trendy short-dated equity options and looked to longer-tenor contracts for protection during a meltdown in U.S. stock earlier this week, exposing the limitations of so-called 0DTE options in guarding against sustained market gyrations, data showed.
Traders have flocked to S&P 500 contracts with zero days to expiry - known as 0DTE contracts - since their 2022 launch, with the category sometimes accounting for more than half of daily S&P 500 options volume.
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Hedge Funds Pile Back Into Crypto Call Options After 'Horrific' Liquidations; Coinbase sees soaring demand for Bitcoin, data shows; Offshore exchanges still see elevated hedging with put buying
David Pan - Bloomberg
Crypto traders are piling back into optimistic bets in the options market almost immediately after one of the worst liquidations of bullish positions this year over the weekend. Traders from both offshore exchanges and US over-the-counter desks are buying calls that gives them the option to buy Bitcoin at $90,000 and more later this year, according to market participants.
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A Volatility Storm Is Buffeting Markets. When Will It Clear?; Stocks rebounded Tuesday, but there might still be bumpy weeks ahead
Jon Sindreu - The Wall Street Journal
This week's stock-market roller coaster appears to be driven by a reversal in speculative trades, rather than the popping of a bubble or an omen of economic disaster. But that doesn't mean we are in the clear. Japan's Nikkei 225 index rose 10.2% Tuesday, undoing more than half the damage caused on Monday, when it recorded its worst one-day drop since the 1987 flash crash. Stocks also rose in European morning trading, albeit much less dramatically. The lightning-fast rebound mirrors the pattern observed Monday in the Cboe Volatility Index, or VIX-a measure of the expected volatility of the S&P 500, known as Wall Street's "fear gauge." In the early morning, the VIX hit 65.73, the third highest mark since records started in 1992, following the 2008 global financial crisis and the 2020 Covid-19 crash. By the market close, however, the VIX had fallen to 38.57, closer to a regular bad day.
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Traders Brace for More S&P 500 Volatility After Jobless Claims; Options are pricing in 1.2% move in equities gauge on Thursday; Investors focused on labor market after last week's jobs print
Jess Menton - Bloomberg
Traders whipsawed by the stock market's gyrations are bracing for more bouts of volatility in the coming sessions, starting with Thursday's report on US jobless claims.
The options market is implying the S&P 500 Index will move 1.2% in either direction that day, based on the cost of at-the-money puts and calls, said Stuart Kaiser, Citigroup Inc.'s head of US equity trading strategy. Should that pricing remain in place by Wednesday's close, it would be in line with the implied move for Aug. 14 - the next reading on consumer prices - and Aug. 29, the day after Nvidia Corp.'s earnings report.
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Sharp jumps in VIX not always associated with recessions
Joy Wiltermuth - MarketWatch
Monday's violent spike in Wall Street's "fear gauge" was one for the history books, coinciding with increased concerns about a potentially wobbling U.S. economy and tumult from the unwinding of a popular Japanese yen "carry trade."
But of the six years when the Cboe Volatility Index, or VIX, went up by more than Monday's 15.18 daily increase, four were years marked by recession, according to Marty Fridson, chief executive officer at FridsonVision High Yield Strategy, who looked at data going back to the fear gauge's inception in the early 1990s.
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Japan Hedge Funds Post Best Single Day Performance, Goldman Says
Hema Parmar and Lulu Yilun Chen - Bloomberg
Japan-focused hedge funds erased their losses from Monday's trading turmoil, posting their best ever single day performance, according to Goldman Sachs Group Inc. The Japan manager group rose 3.6% intraday on Tuesday amid a global market rebound, reversing the setback seen a day before when such funds saw their largest single day drawdown, data compiled by Goldman's prime brokerage showed in a report.
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Australian hedge fund star among big winners from market turmoil; Greg Coffey's hedge fund made hundreds of millions of dollars in recent sell-off
Joshua Franklin and Harriet Agnew, Emma Dunkley and Ortenca Aliaj - Financial Times
Greg Coffey, the Australian hedge fund star once nicknamed the "Wizard of Oz", has emerged as one of the big winners in this month's markets sell-off, according to three people familiar with the situation. Kirkoswald Capital, the firm Coffey started in 2018 after coming out of retirement and which now manages about $8bn, has made hundreds of millions of dollars in the recent market turmoil, two of the people said.
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| | | | | | Exchanges | | | Cboe Announces Planned Launch of Options on VIX Futures, Further Expanding Volatility Product Suite
Cboe
Cboe Global Markets, Inc. (Cboe: CBOE), the world's leading derivatives and securities exchange network, today announced plans to launch options on Cboe Volatility Index (VIX) futures. The new options on VIX futures (VX) are expected to begin trading on Cboe Futures Exchange, LLC (CFE) on October 14, subject to regulatory review.
Cboe currently offers securities-based VIX Index options, which allow investors to manage or gain exposure to broad U.S. equity market volatility. The new options on VIX futures will provide similar utility but are based on front-month VIX futures. With futures as the underlying asset, these options will be CFTC-regulated, enabling a wide array of market participants that are restricted from accessing U.S. securities-based options to use this product to express their views on equity market volatility.
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Nasdaq asks to list options on spot Ethereum ETFs - Filing; Exchanges are still waiting on permission to list options on spot Bitcoin ETFs, too.
Alex O'Donnell - Cointelegraph
Nasdaq's options exchange asked United States regulators to permit options trading on spot Ethereum exchange-traded funds (ETFs), according to an Aug. 6 regulatory filing.
Nasdaq's proposed rule change would apply exclusively to BlackRock's iShares Ethereum Trust (ETHA), which is the only Ether (ETH) ETF listed on Nasdaq's electronic exchange. The others are listed on the New York Stock Exchange's (NYSE) Arca or Cboe.
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Cboe's stock tops CME for first time ever on severe stock market swings
Mark Weinraub - Crain's Chicago Business
Cboe's stock price this week vaulted above its larger rival CME Group's for the first time, with wild swings in the stock market driving demand for the smaller exchange's flagship products.
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JSE delivers stable performance for H1 2024 amidst challenging macro-economic and geopolitical conditions
JSE
The Johannesburg Stock Exchange (JSE) announced a stable set of results for the first half of its financial year, with a Net Profit After Tax of R493 million translating into headline earnings per share of 606 cents. The Group continues to be cash generative, with net cash generated from operations of R502.6 million (2023: R487.9 million), up 3%. Notably, these results have been achieved despite a challenging macro-economic, political and trading environment. The JSE reported a 4.2% growth in operating income underpinned by increasingly diversified revenue streams. This solid financial performance is credited to the strong performance of the JSE's diversified business segments and asset classes, whose year on year (Y-o-Y) growth offset the 12% decline in equity value traded (the JSE's largest market): JSE Investor Services (JIS) grew by 28.9%; commodity derivatives revenue by 24.7%; and revenue from bonds and interest rate trading by 7.8%.
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| | | | | | Strategy | | | There's a Smarter Way to 'Buy the Dip' Next Time
Steven M. Sears - Barron's
A major change has occurred in how some investors react to sharp, volatile stock market declines. Rather than simply rushing to buy S&P 500 index SPX 1.44% put options to hedge their stock portfolios, investors are now increasingly selling puts when their favored stocks decline. (A put sale obligates the seller to buy shares at a set price within a set period.) Put selling always increases in downturns, but it has occurred in such large amounts during recent routs that it has stood out from the tens of millions of options that trade each day.
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The 'short volatility' trade has finally blown up. Why investors probably aren't waiting to pile back in.; After growing in popularity since the COVID-19 crash, the trade finally had a moment of reckoning this week
Joseph Adinolfi - MarketWatch
For years, sophisticated traders reaped huge returns through bets that would pay off if the Cboe Volatility index, known as the VIX of Wall Street's "fear gauge," declined.
The trade had been a steady moneymaker since the COVID-19 crash. Even during the 2022 bear market, when the S&P 500 index fell roughly 25% between its January high and its October low, the rise in the VIX wasn't large enough to force an unwind of the trade, sources told MarketWatch.
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Japanese Yen and S&P 500 Predicting Moves Following BOJ
tastylive (Video)
tastylive hosts Nick Battista, Mike Butler, and Thomas Westwater discuss market trends, focusing on volatility, options trading strategies, and the influence of the Japanese yen on the S&P 500. Battista and Butler highlighted the importance of joining their live discussions on YouTube for real-time trading advice. Westwater presented insights into the carry trade and its recent impact on markets, while also exploring technical analyses and model predictions. The show underscores the need for active participation and strategic trading amidst fluctuating market conditions.
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Momentum vs Volatility Smile
tastylive (Video)
Tom Sosnoff, Tony Battista, and Jacob Perlman discuss the difference between momentum in physics and finance, noting the Efficient Market Hypothesis. In finance, momentum can reverse suddenly unlike physical momentum. They explore volatility, particularly implied volatility (IV), and how it affects options pricing. The concept of a volatility "smirk" versus a "smile" is highlighted, showing its asymmetry and practical application in trading strategies. They stress the unreliability of physical intuitions about momentum in trading.
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| | | | | | Education | | | Why Chasing Volatility With a VIX ETF Is Trickier Than It Seems
Colin Laidley - Investing.com
U.S. investors looking for positive returns had few options on Monday. Stocks tumbled while Treasury bond prices pared early gains. The U.S. dollar slumped and commodities of all stripes-including gold, a traditional safe haven-slid.
One index that was in the green: the Cboe Volatility Index (VIX), which surged to its highest level since March 2020 amid Monday's turmoil.
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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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