We are currently in the unusual market situation called “market up, vol up”, where volatilities go up while the market rallies. It is driven by retail purchases into the tiny calls, notably for the small caps and the meme stocks.
Option traders were charged by the SEC for ‘painting the tape’ on meme stock options after arbitraging exchanges on their Maker-Taker model. Explanations.
Somebody gave you an insider tip and you want to use options? Think again.
The SEC sees you coming. Good luck justifying yourself to a jury. The stick will hurt.
Investors are not happy with Infinity-Q, the derivatives hedge fund that had a slight ‘mismarking’ and is now in a wind-down. We’ve learnt a few more things since the announcement.
FINRA slapped its largest penalty eve, $70m, to Robinhood for numerous and shocking failings.
That fine will raise the firm’s IPO price.
Robinhood has demonstrated and deleterious effects on day traders, including enormous tax losses, suicide, anxiety, addiction.
Meanwhile, the firm is the subject of major regulatory and legal procedures, whose outcomes are hidden or unknown.
The firm’s IPO looks very much like passing on the hot potato… again to unsuspecting and inexperienced traders.
The SEC has hit yet another nail in the binary option coffin, and what a big nail that is. SpotOption was the industrial-size engine behind this global scam.
This article explains binary options, what their true risk really is, how some have weaponized it, the SEC’s actions, as well as shares comments from the investigative press.
Should US stocks settle T+1? The current T+2 settlement date is considered antiquated, and the Robinhood affair (gee, them again???) has relaunched the debate. Here is a review of the DTCC’s proposal, as well as an idea for derivatives traders.
Geode handles $700 bn of Fidelity’s index tracking assets. Geode Diversified, the much smaller hedge fund business, took a 36% loss on COVID’s volatility rally. It is now getting the axe.
‘When you combine ignorance and leverage, you get some pretty interesting results.” Warren Buffett
Three good notes from the derivatives research teams of Morgan Stanley, Société Générale, and Nomura point to a potential squeeze in the VIX, as a result of the increasing retail activism. This technical post explains the contents of the research papers. Spoiler alert, yes, the VIX is prone to a squeeze.