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Tag Archives: short volatility

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 –…

Seth Golden still betting on calm; Derivatives ready for low touch? Newsletter,Options

Observations & Insight Tuesday Miscellany Spencer Doar – JLN Our video of the day is of Maura Cunningham’s MarketsWiki Education talk in New York. She is the founder and executive director of Rock The Street, Wall Street, a nonprofit focused on financial literacy for young women. Why is this important? Two out of three women report knowing little about finance. Moreover, 80 percent of teachers self report feeling incapable of educating young people about personal finance. All eyes are on Apple right now. According to the OIC, NYSE’s new FANG+ index options have traded 11 contracts today. Now would be…

Investors clinging to maligned trade, setting up for more carnage: MS Newsletter,Options

cling mistake

Lead Stories Investors clinging to maligned trade, setting up for more carnage: MS Joe Ciolli – Business Insider It has been said that repeating the same mistake and expecting a different result is a psychological fallacy. If so, one group of investors missed the memo, because that group is once again heading down a dark path that led it astray mere months ago. We’re referring to volatility short sellers, who were caught off-guard by a market shock in early February that left them scrambling to cover positions, putting even more pressure on existing holders. That, in turn, wiped out billions…

Short vol losses a cautionary tale for using leverage; EU probes UK tax treatment of commodity derivatives; Bull market birthday Newsletter,Options

Observations & Insight Miscellaneous Notes for March 9 Spencer Doar – JLN A chunk of the JLN crew will be down in Florida for FIA Boca from Monday through Friday. We have a ton of content lined up with all sorts of finance and technology luminaries – the next month is going to be a torrent of insight and perspective from all corners of the industry. If you are not around, the FIA will be broadcasting some of the key sessions with recordings available after the fact. Just go to FIA’s Boca page. Speaking of next week, our episodes of…

JLN Options: VIX Manipulation Debate; XIV Tales; Insurance and volatility Newsletter,Options

Observations & Insight What’s the Deal With the VIX Manipulation Letter? Inaccuracy and Misunderstanding Spencer Doar – JLN The big options news of the day pertains to a letter alleging VIX manipulation. The letter, written on behalf of an anonymous whistleblower by a Washington D.C. law firm, alleges market makers manipulate the VIX by quoting far out of the money SPX put options so they are included in the VIX calculation at junctures that benefit their trading activities. It’s understandable financial instruments are subject to concerns about manipulation when their inner workings are complicated and not fully understood by the…

The VIX Can’t Cause Vol – Cboe’s View on Volatility ETPs Blog,Commentary,Feature

As volatility began to surge in February, and then exploded on the fifth of the month, exchange traded products (ETPs) that shorted or provided inverse exposure to VIX futures came under fire. The two most popular, Credit Suisse’s VelocityShares Daily Inverse VIX Short-Term exchange traded note (ETN), ticker XIV, and ProShares’ VIX Short VIX Short-Term Futures exchange traded fund (ETF), ticker SVXY, were the main focus, as they suffered huge losses. Trading in them was halted and then Credit Suisse announced it would liquidate its note. Those two products, more than any other, put intense scrutiny on such volatility products…

Volatility, Inc.; Carnage, but no volatility crisis; Debt ceiling the real worry; VIX ETPs Newsletter,Options

Observations & Insight Follow up – Sounds like Seth Golden is…. OK? Spencer Doar – JLN Lots of news today, as one would expect. Yesterday’s blog on the short volatility trade was titled Vol-cano Erupts – How’s Seth Golden Doing? Funnily enough, Quartz was able to catch up with Golden – A day-trading millionaire says he isn’t fazed by his favorite strategy blowing up. Of course, with a guy that talks his book, you get lines from the story like this: “He lost money on Monday, but it wasn’t anything he hasn’t experienced before.” Uhhh, how has Golden experienced an…

Vol-cano Erupts – How’s Seth Golden Doing? Blog,Commentary,Options

Last year there were a few stories that came across the desk regarding the juniorization of firms and how removing experienced senior personnel could present risks of its own. After all, if you came into the markets in the 2010s, how would you have experience with crazy drawdowns? (Myself included.) Maybe some are ahead of the curve and have at least seen Trading Places. Well, a lot of staff just gained some experience. The options and volatility stories of the last few days are intertwined and generally fall into the following storyline in some way: 1) Markets finally welcomed volatility…

Short volatility Waterloo; Hedging activity pop; VIX ETPs in all their glory Newsletter,Options

Observations & Insight Vol-cano Erupts – How’s Seth Golden Doing? Spencer Doar – JLN Last year there were a few stories that came across the desk regarding the juniorization of firms and how removing experienced senior personnel could present risks of its own. After all, if you came into the markets in the 2010s, how would you have experience with crazy drawdowns? (Myself included.) Maybe some are ahead of the curve and have at least seen Trading Places. Well, a lot of staff just gained some experience. The options and volatility stories of the day are intertwined and generally fall…