| | | | | | | | February 07, 2025 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
|
| | | | Observations & Insight | | | If you want to know why zero days to expiration options, or 0DTE options, are growing even more popular, think about the volatility that the unpredictable President Donald Trump brings to the markets broadly, and to individual regions, countries and companies. See The Wall Street Journal story titled "Traders See Profits Evaporate in Minutes as Trump Convulses Bets; Positions have become very short dated" for reference. Long 0DTE options allow you to be in the market with limited risk and a built in stop. You don't have to worry about the slippage runs and liquidity vacuums occurring when the market suddenly changes directions. You might also want to check out a story in the Financial Times titled "How investors can harness Trump-induced volatility."
I saw many retail brokers move more towards options trading years ago, long before Trump was a market factor, as the speed and increased access of electronic trading created more sudden moves, which some people called "flash crashes." These were just liquidity vacuums, like what we saw back in the day on the trading floor when local traders would put their hands in their pockets waiting for the market to discover some commercial buying or selling they could lean on. The biggest reason these retail brokers moved to options, though, was pure capital preservation. The customer could only lose so much on a long option trade, or so they thought.
For the record, I once had a client who bought a corn call option, and the position prospered. It was ten cents in the money at expiration, so he exercised and took the long corn futures position. The following trading day there was a government report and the market was limit-down for two straight days, and the customer ended up losing more than the original investment in the option when he was finally liquidated. The lesson learned, there is the theoretical way things work and then there is reality, which can be different. ~JJL
| | | | | | Lead Stories | | | Younger Investors Like Options and Crypto. They Might Be Sorry.; Members of Gen Z are starting their investing journey at younger ages than older generations did.
Andrew Welsch - Barron's
Thanks to smartphones, easy-to-use brokerage accounts, and zero-commission trades, everyone is just a swipe away from buying stocks or other financial instruments. As a result, Americans are starting their investing journeys at far younger ages than previous generations.
/jlne.ws/4hPylwY
CME Bitcoin futures and options volumes hit record in January
Ahmed Abdulazez Abdulkadir - Investing.com
A report by CCData, a cryptocurrency researcher, highlighted a surge in cryptocurrency trading volumes on the CME, the largest derivatives exchange in the United States. The exchange reached an all-time high in January, with volumes totaling approximately $285 million.
The increase in trading volumes, which saw an 8% rise over the previous month, was driven by a significant uptick in Bitcoin futures and options. Bitcoin futures trading volumes soared to about $220 billion, while options experienced an even more dramatic increase of approximately 125%, reaching nearly $6 billion.
/jlne.ws/4hMPTtL
Exchange operator Cboe's quarterly profit climbs as hedging activity surges
Prakhar Srivastava and Laura Matthews - Reuters
Exchange operator Cboe Global Markets reported a rise in fourth-quarter adjusted profit on Friday, driven by increased options trading as investors sought to hedge against risks from economic and geopolitical uncertainties.
Cboe's options trading segment revenue grew 3% in the quarter, compared with last year, while futures revenue fell 7%.
Heightened concerns about interest-rate cuts, a potential trade war and geopolitical tensions kept investors on edge despite a strong market rally, driving demand for hedging.
/jlne.ws/4aUfNcW
Traders See Profits Evaporate in Minutes as Trump Convulses Bets; Positions have become very short dated: K2 Asset Management; FX options trading volumes have surged to multi-year highs
Ruth Carson, Alice Atkins, and Carolina Wilson - Bloomberg
The early days of Donald Trump's trade war have been marked by a flurry of advances and retreats, forcing traders to adapt by increasingly making bets that are more conservative than usual or easily reversed. "The market is trying to predict and trade off a very unpredictable situation and person," said Antony Foster, the London-based head of Group-of-10 spot trading at Nomura International Plc, who has taken to running smaller positions on currencies. "You could look like a hero one minute, only for the situation to turn on a sixpence and you look like a zero the next."
/jlne.ws/3EneTJy
Traders See Profits Evaporate in Minutes as Trump Convulses Bets; Positions have become very short dated: K2 Asset Management; FX options trading volumes have surged to multi-year highs
Ruth Carson, Alice Atkins, and Carolina Wilson - Bloomberg
The early days of Donald Trump's trade war have been marked by a flurry of advances and retreats, forcing traders to adapt by increasingly making bets that are more conservative than usual or easily reversed. "The market is trying to predict and trade off a very unpredictable situation and person," said Antony Foster, the London-based head of Group-of-10 spot trading at Nomura International Plc, who has taken to running smaller positions on currencies. "You could look like a hero one minute, only for the situation to turn on a sixpence and you look like a zero the next."
/jlne.ws/3EneTJy
Crossed signals: row over collusion pits scholars against traders; An Oxford study claims to show evidence of collusion in ETF markets. Some traders give it short shrift.
Luke Clancy and Mauro Cesa - Risk.net
Researchers at the University of Oxford think market-makers at the European Union's largest exchange are colluding to pick the pockets of exchange-traded fund (ETF) investors. The bombshell claims were published last month in a paper titled 'Anonymity, signalling and collusion in limit order books', which presents evidence that market-makers covertly reveal themselves to each other by posting outsize orders that often end in the same two or three digits.
/jlne.ws/4hI8QO0
Trump Media to Trademark a 'Made in America ETF' in Finance Push
Annie Massa - Bloomberg
Trump Media & Technology Group Corp. applied to trademark brands for six investment products with themes that closely track President Donald Trump's priorities in office. The money-losing social media company is looking to debut the "Truth.Fi Made in America ETF," "Truth.Fi U.S. Energy Independence ETF" and "Truth.Fi Bitcoin Plus ETF," along with three other vehicles called separately managed accounts with the same themes on its recently announced Truth.Fi financial platform, subject to regulatory approval, according to a Thursday statement.
/jlne.ws/4hq8eNl
Republican attorneys-general say Wall Street firms underplay China risk; Companies including BlackRock and JPMorgan accused of 'misstatements or material omissions'
Demetri Sevastopulo in Washington - Financial Times
Republican attorneys-general from more than a dozen US states have accused BlackRock, Goldman Sachs and JPMorgan of misrepresenting the risks of investing in China, including the possibility of a Chinese invasion of Taiwan. In a letter to the three firms and other big asset managers, including State Street, Invesco and Morgan Stanley, 17 attorneys-general said the financial groups were concealing or misrepresenting the investment risks in China. "We are particularly concerned about BlackRock's material misstatements and omissions, as BlackRock is the largest issuer of emerging market ETFs and China ETFs," they wrote in a letter that focused on BlackRock.
/jlne.ws/4aONqN2
US dealmaking suffers worst start to a year in a decade amid Trump volatility; Wall Street executives say uncertainty over trade and economic policy has put sudden chill on M&A
James Fontanella-Khan, Jamie Smyth, George Steer and Antoine Gara - Financial Times
US dealmaking has suffered its worst start to a year in a decade after policy volatility following Donald Trump's election and escalating rhetoric over tariffs put a sudden chill on activity. The overall number of US mergers and acquisitions collapsed nearly 30 per cent in January to 873 deals compared with a year ago, the lowest level since 2015, according to LSEG data. In dollar terms, deal activity fell 18 per cent compared with a year ago.
/jlne.ws/4aO7m2u
| | | | | | Exchanges | | | Cboe Global Markets Reports Results for Fourth Quarter 2024 and Full Year
Cboe
Cboe Global Markets, Inc. (Cboe: CBOE) today reported financial results for the fourth quarter of 2024 and full year. "Cboe reported strong fourth quarter results, capping full year 2024 net revenue growth of 8% to a record $2.1 billion, diluted EPS of $7.21, and record adjusted diluted EPS1 of $8.61, up 10% year-over-year," said Fredric Tomczyk, Cboe Global Markets Chief Executive Officer. "While the robust options volumes were a standout for 2024, the results were notable in that each category - Derivatives Markets, Data Vantage, and Cash and Spot Markets - contributed to the fourth quarter and full year growth. We enter 2025 on solid footing, with a refined strategic focus and the financial flexibility to execute on our vision. We remain well positioned to benefit from the secular market trends to drive durable growth for shareholders."
/jlne.ws/4aSsuoj
Miami International Holdings Reports Trading Results for January 2025; MIAX Exchange Group Options Volume Jumps 26.2% to Record Level with MIAX Futures Volume Surging 48.7%
MIAX
Miami International Holdings, Inc. (MIH), a technology-driven leader in building and operating regulated financial markets across multiple asset classes, today reported January 2025 trading results for its U.S. exchange subsidiaries-MIAX, MIAX Pearl, MIAX Emerald and MIAX Sapphire (collectively, the MIAX Exchange Group), and MIAX Futures.
/jlne.ws/4hEmKkq
CME Group Inc. Names Slate of Director Nominees
CME Group
CME Group Inc., the world's leading derivatives marketplace, today announced its slate of candidates for its board of directors for election at the company's annual meeting to be held Thursday, May 8, 2025. The board of directors recommends the Class A and Class B shareholders voting together elect the following individuals to the board:
/jlne.ws/416HGv3
| | | | | | Moves | | | Jamal Oulhadj is starting a new position as business development - clearing (MENA) at Marex, he shared on LinkedIn.
Michael Kingsley has joined State Street as vice president of public relations, after seven years at Forefront Communications, he shared on LinkedIn.
Kathleen Provost has been promoted to marketing manager at Cboe Global Markets. ~JJL
| | | | | | Strategy | | | How investors can harness Trump-induced volatility; Some want their portfolio to take cover with cash or gold - for others, it's a huge buying opportunity
Alan Livsey - Financial Times
Imagine the world as a snowglobe-style paperweight. Donald Trump seems to perceive it as such, fond of turning it upside down with a shake. In a world filled with random events, his rapid-fire pronouncements can cause price flutters - volatility - across all asset markets. Certainly, his latest pronouncements on trade tariffs with Canada, Mexico and China have roiled markets. Volatility can signal investor fear but also offer an opportunity to clear minded buyers. Among professional portfolio managers, views vary on what action to take to protect their clients' funds. Some will have a proactive hedging policy, others will prefer to remain fully invested lest they mistime any asset sales.
/jlne.ws/40S0xsa
Investing Offers a Free Lunch, Says This Wall Street Veteran. Take It.; George Gatch, CEO of J.P. Morgan Asset Management, advises clients to diversify their holdings and stay in the market.
Debbie Carlson - Barron's
The Economic Policy Uncertainty Index is at the highest level since 2020. So are many equity valuations and bond yields. Yet, getting out of the markets at this time-or any time-is the wrong move, says George Gatch, CEO of J.P. Morgan Asset Management, a unit of JPMorgan Chase
/jlne.ws/3WTXY7N
Outsized Move
Cboe (Video)
In the #RUTreport, Angela Miles lets us know $MRUT options trading activity, the straddle suggests we could see a move ~1.4% today and ~2.7% next week, and more.
/jlne.ws/413HsET
| | | | | | Miscellaneous | | | Politico Draws DOGE's Ire, Signaling a Shakeout for Media with Major Government Customers; Elon Musk's cost-cutting project flags more than $8 million in spending on the political publication
Alexandra Bruell - The Wall Street Journal
An inside-the-Beltway must-read media outlet has quickly become a flashpoint in President Trump's pursuit of federal government-spending cuts.
Politico, launched nearly 20 years ago to provide insight into government goings-on and Capitol Hill haggling, built a lucrative business selling news and, increasingly, targeted products to federal agencies and the lobbyists and consultants who serve them. It developed sophisticated policy-analysis and tracking tools, in addition to exclusive news and newsletters.
/jlne.ws/3Q82RGz
| | | | | | | | | 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.
© 2025 John J. Lothian & Company, Inc. All Rights Reserved. |
|
|
