| January 11, 2023 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
|
| | | | Observations & Insight | | |
Options Discovery Episode 12: Spread Trading; Dan Keegan of Optionthinker.com Talks Call and Put Spreads With JLN's Alex Teng
JohnLothianNews.com
In this episode of Options Discovery, Alex Teng introduces some bearish spread strategies with the bear call spread and the bear put spread. Alex also talks to Dan Keegan, former Cboe trader and lead educator at Optionthinker.com, to dive deeper into these strategies. Dan also delivers insight into his experience as a trader and options educator.
Watch the video »
++++
Bringing Efficiency to Index Licensing Pricing is the Goal of BenchMarket and Bruce Traan
JohnLothianNews.com
Bruce Traan is a 15+ year veteran of the Cboe who had jumped into the crypto world, but now has created his own firm to bring fairness in pricing to firms needing the licensing services of an index provider. The uneven pricing of the index provider world is what he seeks to solve with his new enterprise, BenchMarket.
Watch the video »
| | | | | | Lead Stories | | | VIX, Wall Street's Fear Gauge, Extends Longest Lull Since 2021
Eric Wallerstein - WSJ
Wall Street's classic volatility indicator hasn't been this subdued in more than a year.
The Cboe Volatility Indexâknown as the VIX, or "fear gauge" derived from options prices tied to the S&P 500âhas sat below 25 (about its one-year average, according to DataTrek) for 42 days, the longest such streak since November 2021.
In March 2020 and 2008, the VIX closed above 67. Last year, it didn't finish a trading day above 35.
/jlne.ws/3iwRmLK
Simplify bursts into equity index options lead
Samuel Karasek - Risk.net
Simplify Asset Management added $39.1 billion of equity index options to its books in the third quarter of 2022, becoming the most active US mutual fund and exchange-traded fund (ETF) manager in the space. The increase skewed heavily towards puts, growing the firm's book seventy-one-fold.
/jlne.ws/3GBbogc
Bull Market Is Back as Recession Worries Fade, Edward Yardeni Says
John McCorry and Jonathan Ferro - Bloomberg
Closely followed strategist Edward Yardeni, who saw resilience in the US economy even as recession worries grew last year, remains sanguine on where global financial assets â including US stocks â are headed.
"The outlook for the world economy is actually improving," the president and founder of Yardeni Research Inc. told Bloomberg Television's Surveillance on Wednesday. US equities "made a low on Oct. 12. That was the end of the bear market and we 're back in a bull market." Since closing at 3,577.03 that day, the S&P 500 has risen almost 10%.
/jlne.ws/3Gvym8t
Hedge Fund Clients Seek Out Stock-Pickers After Tough 2022
Katherine Burton, Hema Parmar, and Nishant Kumar - Bloomberg
Hedge fund clients profited most by investing in macro and multi-strategy hedge funds last year â and many of them are betting the same strategies will be winners again in 2023.
Some are also seeking out stock funds, which is a bit surprising given that some of the biggest equity funds are coming off a year of record losses.
/jlne.ws/3XpeVFe
Why Thursday's U.S. CPI report might kill stock market's hope of inflation melting away
Isabel Wang - MarketWatch
A mild stock market rally to kick off the new year will be put to the test Thursday when investors face a highly-awaited U.S. inflation reading which could well help determine the size of the Federal Reserve's next interest-rate increase.
The December CPI reading from the Bureau of Labor Statistics, which tracks changes in the prices paid by consumers for goods and services, is expected to show a 6.5% rise from a year earlier, slowing from a 7.1% year-over-year rise seen in the previous month, according to a survey of economists by Dow Jones. The core price measure that strips out volatile food and fuel costs, is expected to rise 0.3% from November, or 5.7% year over year.
/jlne.ws/3XqTEL0
Four shorts and a long at the core of LME nickel meltdown
Andy Home - Reuters
Four big short position-holders and one financial player on the long side were at the core of the London Metal Exchange's (LME) nickel meltdown last March.
The clash of positioning is revealed in a report by independent consultancy Oliver Wyman, hired to review the events in the nickel market leading up to the LME's decision to suspend trading and cancel trades on March 8.
/jlne.ws/3CGRGi1
This has been a bad sign for stocks historically â when there's a big gap between how companies and the government measure profits
Steve Goldstein - MarketWatch
Earnings season is just around the corner. But as investors prepare for the onslaught, it's worth noting that there are two ways to measure corporate profitability.
Major business news publications like MarketWatch highlight reported financial results. But the U.S. government measures profitability differently, drawing on data from corporate tax returns. And while the two usually move hand-in-hand, that's not always the case, owing to issues like the prevalence of stock options for employee compensation (excluded from company reports) and how quickly assets get depreciated (faster under the government's methodology).
/jlne.ws/3w2b70F
| | | | | | Exchanges | | | Exchange Highlights: Year-end Summary and Comments on Proposed Market Structure Reforms
Members Exchange
In 2022, MEMX grew and diversified the liquidity on the equities platform by partnering with our members and adding features. Some highlights from the last year includes: Retail volume grew 154% year over year to $193 billion, with firms benefiting from high fill rates on non-marketable limit orders. Midpoint volume grew 201% year over year to $165 billion, with high levels of midpoint liquidity available in thousands of symbols throughout the trading day. NBBO price setting instances increased 257% year over year with NBBO-setter market share ranging from 11.2% to 14.1% in the second half of the year. The SEC approved MEMX's rule filing to launch an options exchange and the build is well underway. MEMX became the exchange technology provider for EDX and Dream Exchange.
/jlne.ws/3CEvOn4
Cboe Clear Europe Yearly Recap and Look Ahead
Cboe
In cash equities, we managed to hit several major milestones in 2022. We cleared 1.5 billion client trades during the year, an all-time record and up on the 1.24 billion cleared in 2021 (see chart 1). In addition to enhancing our leading position on ven-ues that support interoperable clearing, we also saw significant growth in preferred clearing, which is used on venues that do not support interoperability. Cboe Clear Europe cleared a record 52m trades in 2022 through the preferred clearing model, compared to 9 million in 2021 (see chart 2). It is through this service that we have seen significant traction on Euronext markets, and we ended the year with a daily market share of ~16% on the group's exchanges in Amsterdam, Brussels, Lisbon and Paris - an all-time high. We also saw steady growth in our preferred cleared volumes on Euronext Milan, a service we first introduced in September 2021 to help establish clearing competition in the Italian market.
/jlne.ws/3X2d4pP
CME Group Achieves Record International Average Daily Volume of 6.3 Million Contracts in 2022, Up 15% from 2021
CME Group
CME Group, the world's leading derivatives marketplace, today announced that it achieved record international average daily volume (ADV) of 6.3 million contracts in 2022, up 15% from 2021. This record, reflecting all trading done outside the United States, was driven largely by growth in Equity Index and Foreign Exchange products, up 26% and 22% respectively.
/jlne.ws/3X1nI01
| | | | | | Regulation & Enforcement | | | FIA publishes China netting and collateral legal opinions
FIA
In December 2022, FIA published new industry standard netting and collateral legal opinions for the People's Republic of China (PRC). Recent positive developments in the PRC's legislative framework for derivatives, specifically the adoption of the Futures and Derivatives Law in 2022, made it possible for FIA to commission these opinions for the benefit of global clearing firms that provide derivatives clearing services (cleared OTC and ETD) to PRC clients when they wish to access non-PRC CCPs under the English law governed FIA Terms of Business.
/jlne.ws/3IGwVXe
| | | | | | Strategy | | | Options Trades to Make: Goldman Sachs Options Investing Strategy
Marley Jay - Business Insider
Almost everybody who's investing today is looking for new ways to earn reliable income, since it doesn't look like stocks or bonds are going to deliver explosive returns anytime in the near future.
Goldman Sachs is attempting to do just that in the options market using overwriting, or selling options that the seller does not expect to be exercised. The options then expire, and the seller can keep the premium from selling the option. Overwriting is also sometimes used as a way to hedge against long positions in stocks.
/jlne.ws/3IBo758
PE Ratios and Recessions
Cboe (Video)
In #Vol411, @JoeTigay covers tomorrow's crucial #CPI release & the implications for earnings should there be a recession. $SPX $VIX
/jlne.ws/3CE9tpK
| | | | | | Miscellaneous | | | Crypto Is Just a 'Hot Ball' of Momentum-Chasing Money, New Paper Says
Tracy Alloway and Joe Weisenthal - Bloomberg
In physics, momentum is the force gathered by a moving object. In investing, it's the ability for prices to keep going up or down.
In crypto, momentum might just be the foundational characteristic.
/jlne.ws/3IGvic4
| | | | | | | | | JLN Options is sponsored by: | | | | | | | | | | | | | | | | | | | |
|
|
| | | |
| | | | 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
Publisher | | | Sarah Rudolph
Editor-in-Chief
| | | Jeff Bergstrom
Editor
| | |
|
|
Disclaimer: All John Lothian Newsletters, JohnLothianNews.com, MarketsWiki.com and MarketsReformWiki.com are products of John Lothian News, a division of John J. Lothian & Company, Inc. The opinions expressed in all John J. Lothian & Company, Inc. publications are strictly those of their respective editors. They are intended solely for informative purposes and are not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Information is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Security futures are not suitable for all customers. Futures and options trading involve risk. Past results are no indication of future performance. Nothing on any John J. Lothian & Company site should be considered an endorsement by any sponsor of any website or newsletter content.
© 2023 John J. Lothian & Company, Inc. All Rights Reserved. |
|
|
