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Tag Archives: hedging

Fear Driving Up Hedging Costs; GMEX and Demand Derivatives creating new exchange JLN Options Newsletter,Newsletter,Options

Observations & Insight Mad Morning Sees Half Dozen S&P 500 Flips as Tech Gains, Fades Sarah Ponczek and Vildana Hajric – Bloomberg Traders returning dazed from the worst stock selloff in nine months found themselves engulfed in more chaos Thursday as volatility surged and the S&P 500 went from up to down and back half a dozen times. /bloom.bg/2yw06qA ****SD: Yesterday’s cleared volume at the OCC was 33.9 million contracts, making it the 11th best day ever. That total is more than 66 percent higher than the ADV thus far in 2018. So, to all our market making friends –…

VIX Activity Spikes; Nasdaq Patent Infringement Claim Dismissed JLN Options Newsletter,Newsletter,Options

Lead Stories Options Activity in `Fear Gauge’ Spikes as U.S. Stocks Sink Luke Kawa – Bloomberg October’s living up to its reputation as a volatile month for equities. Trading activity in options linked to the stock market’s so-called fear gauge spiked as the S&P 500 Index was poised for its longest losing streak since U.S. President Donald Trump’s election win. VIX options are tied to the Cboe Volatility Index, a measure of traders’ expectations for swings in the benchmark U.S. equity gauge. Volume has averaged more than 1 million a day over the four sessions ended Tuesday. That’s the most…

Virtu Is Pursuing ITG Takeover; Speculative Hedge Fund Bets JLN Options Newsletter,Newsletter,Options

Lead Stories Virtu Is Pursuing Takeover of Investment Technology Group Nick Baker and Annie Massa – Bloomberg (SUBSCRIPTION) Companies have been holding recent discussions about a deal; Potential transaction would follow Virtu’s purchase of KCG High-speed trading firm Virtu Financial Inc. is seeking to acquire independent brokerage Investment Technology Group Inc. as pressure mounts for proprietary traders to branch out. /jlne.ws/2Qt0n4M ****SD: Wow. The consolidation trend marches on (potentially). Volatility likely to reach capital markets eventually, experts say Charles Tomlinson – SmartBrief Capital markets haven’t shown much of a response to economic volatility, but that is likely to change, panelists…

Options Market Share Is Being Spread Around; SKEW Index Record JLN Options Newsletter,Newsletter,Options

Observations & Insight Half Week Notes Spencer Doar – JLN According to Vance Harwood’s calculations (he writes the Six Figure Investing Blog), a 1.5x leveraged vol fund needs to reverse split every 8-22 months. UVXY just did a 5:1. This is its ninth reverse split, but the first since the fund’s leverage was changed from 2x to 1.5x. For more, see this post. Premier Li Keqiang said China will not devalue the yuan to help boost exports. On a related note, look at soybean prices. Also see Reuters’ Inside China’s strategy in the soybean trade war. Denmark’s largest bank is…

Brexit, Brexit, Brexit, plus, Legacy Hedging Problems Newsletter,Options

Lead Stories How Oil Producers Can Go Broke When The Price Of Oil Soars Ed Hirs – Forbes It is earnings season, and oil producers are not all putting out good earnings reports, despite a rise in the price of West Texas Intermediate (WTI) from $40 per barrel just two years ago to $70 per barrel today. You would think that companies that barely survived two years ago would now be flush with earnings, but for some companies, the opposite is true, as financial contracts from a year or so ago are now coming back to bite. /jlne.ws/2MybLuE ****SD: You…

Equity options transparency; Funds That Seek to Hedge the Next Correction Newsletter,Options

Lead Stories Equity Options Transparency: What You See May Not Be What You Get Larry Tabb and Alicia Reilly – TABB Forum With no dark pools, hidden trades, or internalization schemes, and with each execution hitting the tape posted on a licensed and regulated exchange, we love to talk about how transparent the equity options markets are. This has helped propel option volumes to grow to well over 15 million contracts a day in May 2018 as retail customers and firms continue to enter the space. With 15 exchanges and multiple pricing models (some even on the same exchange), however,…

It’s WAR! Newsletter,Options

Observations & Insight TGI (Tariff) Friday SD – JLN Round 1 of the official tariff tiff began last night. How are you feeling? While foot traffic has diminished in downtown Chicago this week as vacations take their toll on active headcount and the usual “summer quiet” stories making the rounds, I don’t feel lulled (other than the dearth of options specific news). The “lack of lull” feeling isn’t totally out of place. Daily notional turnover on U.S. NMS exchanges in June was $350.1 billion compared with a summer norm of <$300 billion. (July has been slower thus far.) “China this,…

Two Studies on Options Use – Institutional Users and European Demand Feature,Mwiki,Video,video

Over the past two months, two studies commissioned by the Options Industry Council were released. The  studies about the varying uses of options by different market participants were conducted Greenwich Associates and Burton-Taylor International Consulting, respectively.   The first study, conducted by Greenwich, looked at how institutional users of exchange-listed options view the product. In the below video filmed at the Options Industry Conference in Amelia Island, OIC’s Joe Cusick and Greenwich’s Richard Johnson go over some of the key findings of the study.   The second study, conducted by Burton-Taylor, found that some 9 percent of U.S. options order flow comes…

Shortwave trading; Robinhood’s $2b a day options biz; Mammoth bond wager Newsletter,Options

Observations & Insight A little-known business at Robinhood has exploded, and now it’s launching a service to go after the most serious traders Frank Chaparro – Business Insider Prime (SUBSCRIPTION) Robinhood’s options-trading business is exploding, according to Chris O’Neil, a product manager at the California broker. Now the firm, which says it has seen $2 billion in options-trading volumes since launch, is upping the ante with the rollout of multileg options. The move shows the company is seriously going after the business of more experienced traders, says Devin Ryan, an analyst at JMP Securities /goo.gl/C2CX83 ****SD: First of all, not…