Breaking News

Cboe Plans December 10 Launch of Bitcoin Futures Trading; VIX Options Set New Daily Volume Record on Friday, December 1

Lead Stories

Cboe Plans December 10 Launch of Bitcoin Futures Trading
Cboe
Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, today announced that Cboe Futures Exchange (CFE), plans to offer trading in bitcoin futures beginning at 5:00 p.m. CT on Sunday, December 10, 2017, at the start of Global Trading Hours. Monday, December 11, will be the first full day of trading, and trading will be free1 through December.
/goo.gl/QmQvjD

****SD: From Bloomberg – Cboe Says It Will Start Bitcoin Futures Trading on Dec. 10, Giving it a Week of Exclusivity

VIX Options Set New Daily Volume Record on Friday, December 1
Cboe
Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, today said that trading volume in options on the Cboe Volatility Index (VIX) reached a new all-time high on Friday, December 1.
/goo.gl/UezJhk

The ‘VIX Elephant’ and ’50 Cent’ Are Back
Luke Kawa – Bloomberg
The “VIX Elephant” has awakened. And “50 Cent” is back.
At a moment when political tumult is roiling markets, volatility trading patterns closely associated with two high-rolling, but unknown, investors have re-emerged.
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The Riddle of the VIX Decoded
Simon Constable – WSJ
The VIX is the label people commonly use for the recently renamed Cboe Volatility Index. What else it is isn’t always clear to investors.
The problem is that the VIX has become something of a Rorschach inkblot, with people projecting meaning into the index that perhaps isn’t there, such as signs of an impending market crash.
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Era of Low Volatility Will Unwind Formulaically
Dean Curnutt – Bloomberg
Sir John Templeton, the pioneer in global mutual funds, once said “the four most costly words in the annals of investing” are “this time is different.” That should resonate with monetary policy makers and institutional investors grappling with the causes, impacts and risks of the lowest market volatility, by far, in the era of modern finance.
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CBOE, CME to jump into bitcoin futures trading
Samantha Bomkamp – Chicago Tribune
Bitcoin futures are coming to Chicago’s two main financial exchanges, allowing investors to bet on price swings of the prevailing digital currency and providing perhaps the biggest validation yet to a financial product that’s still largely unknown by the average consumer.
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As Brokers Line Up to Offer Bitcoin Futures, Others Are Quiet
Brian Louis – Bloomberg
TD Ameritrade, Ally Invest intend to offer new bitcoin futures; CME and Cboe announced plans Friday to roll out new products
U.S. brokerages have a decision to make. Will they offer futures contracts tied to bitcoin — the cryptocurrency viewed as a gold mine or bubble — to clients?
jlne.ws/2BIHnIQ

As binary options shuts down, some ex-operatives turn to cryptocurrency
The Times of Israel
On a weekday morning in October, a day before the Knesset passed a law outlawing Israel’s widely fraudulent binary options industry, the streets of Ramat Gan’s diamond district were far from bustling.
jlne.ws/2kjkc3Q

Weekend Review of Volatility Indexes and ETPs – 11/27/2017
Russell Rhoads – Cboe
S&P 500 volatility was higher across the four indexes that measure expected volatility over different time frames. Keep an eye on the VIX3M to VIX relationship if VIX remains at higher levels. VIX3M can be an early indicator for a rise in VIX.
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**** Also Weekend Review of Russell 2000 Options and Volatility – 11/27/2017 and Weekend Review of VIX Options and Futures – 11/27/2017

Exchanges and Clearing

CBOE and CME battle for bitcoin futures bragging rights
Philip Stafford in London – Financial Times
Chicago’s two largest derivatives exchanges are going head to head in coming weeks to become the US market of choice for bitcoin futures trading.
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Nasdaq Nordic – Trading Statistics Nov 2017
Press Release
…Derivatives trading decreased by 2.4% to a daily average of 406,386 contracts, compared with 416,552 contracts in November 2016.
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Saudi Arabia signs major markets upgrade with Nasdaq
Philip Stafford – Financial Times
Saudi Arabia has signed a deal with US group Nasdaq to upgrade the country’s financial markets infrastructure, another step towards its long-term goal of diversifying its economy.
The country’s stock exchange, the Tadawul, on Monday said it would use technology from the US group as the backbone for share trading.
jlne.ws/2klKgLz

OCC Cleared Contract Volume Increased One Percent in November
OCC
OCC, the world’s largest equity derivatives clearing organization, announced today that cleared contract volume in November was up one percent from November 2016 with 396,779,462 contracts. Average daily volume at OCC is up four percent in 2017 with 17,236,237 contracts. OCC cleared futures volume was up six percent in November with 10,887,050 contracts. OCC’s stock loan program reported strong volume numbers, up 34 percent in November and year-to-date activity up 22 percent from 2016.
jlne.ws/2kmc6HB

CME Group Reached Average Daily Volume of 18 Million Contracts in November 2017, up 21 Percent from October
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that November 2017 average daily volume (ADV) reached 18 million contracts, down 14 percent from the record November 2016 average daily volume, but up 21 percent compared with October 2017 and representing the second highest monthly average daily volume to date in 2017. CME Group November 2017 options volume averaged 3.5 million contracts per day, down 18 percent versus November 2016, with electronic options averaging 2.2 million contracts per day, down 6 percent from the same period last year. Open interest at the end of November was 123 million contracts, up 9 percent from the end of November 2016.
jlne.ws/2klH42y

Eurex reaching major milestones in 2017
Eurex
In November, the total trading volume was 133.3 million contracts (Nov 2016: 151.8 million; Oct 2017: 115.8 million).
jlne.ws/2klyyAL

Moves

Senior bank trader quits for BlueCrest, lasts eight months and then re-emerges at prop trading firm
Paul Clarke – efinancialcareers
The former head of European index and equity products trading at Commerzbank in London, who quit in November last year to join BlueCrest Capital Management as a partner, lasted just eight months at the hedge fund and has now been hired by a London-based derivatives prop trading firm.
jlne.ws/2BHGNv6

Deutsche Bank’s derivatives sales chief departs for BNY Mellon
Paul Clarke – efinancialcareers
A senior Deutsche Bank salesman, who has spent the past nine years in roles across Hong Kong and London, has just signed up to BNY Mellon in a big role straddling Europe and Asia.
Harvey Twomey, who was latterly global head of sales for Deutsche’s listed derivatives and markets clearing business in London, has just joined BNY Mellon as head of sales for its markets business in Europe, the Middle East and Africa as well as Asia-Pacific.
jlne.ws/2kjT2K7

Regulation & Enforcement

Three CFTC-Regulated Exchanges Self-Certify Bitcoin Derivatives Contracts
Gary DeWaal – Lexology
On December 1, three exchanges regulated by the Commodity Futures Trading Commission self-certified new cash-settled derivatives contracts based on Bitcoin. The exchanges – known as designated contract markets (DCMs) – are the Chicago Mercantile Exchange, the CBOE Futures Exchange and the Cantor Exchange.
jlne.ws/2kmLo1n

SEC approves Cboe Options’ plans for electronic-only order type
Maria Nikolova – FinanceFeeds
Chicago Board Options Exchange (CBOE), now known as Cboe Options Exchange, a part of Cboe Global Markets Inc (NASDAQ:CBOE), has obtained a regulatory nod of approval for its proposal to introduce an electronic-only order type. On Friday, December 1, 2017, the United States Securities and Exchange Commission (SEC) published an order approving the proposed change to Cboe’s rules.
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UK pushing to include Bitcoin under money-laundering rules
Reuters
Britain wants to increase regulation of Bitcoin and other digital currencies by expanding the reach of European Union anti-money-laundering rules that force traders to disclose their identities and report suspicious activity.
jlne.ws/2kkQStG

Strategy

Characteristics of Theta
Sage Anderson – tastytrade blog
The “Greeks” are critical metrics in the realm of options trading, and today we are providing more context on one in particular – theta.
As a reminder, the collective “Greeks” are parameters that measure the sensitivity of an option’s value to changes in the following: underlying price, time, volatility, and interest rates.
/goo.gl/HY2svR

Miscellaneous

Central banks need to ensure tightening cools froth in financial markets: BIS
Marc Jones – Reuters
Major central banks must ensure their efforts to gradually lift interest rates prove effective enough to cool some already “frothy” financial markets, the Bank for International Settlements (BIS) said in its latest report.
jlne.ws/2BJHXX6

Bitcoin’s Diverse Futures
David Fickling – Bloomberg
“Why did the market go up today?”
“There must have been more buyers than sellers.”
That piece of circular logic is a sort of laconic joke among traders, equivalent to saying: “I have no idea.” Naturally, prices will only rise if the enthusiasm of buyers outweighs the fear of sellers.
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About Author

Bergstrom is chief information officer of John J. Lothian & Co. He edits MarketsWiki and JLN Options.