Latest news with #RockyFishman
Yahoo
13 hours ago
- Business
- Yahoo
Options Markets Show Traders Reposition as Mideast Tension Fades
(Bloomberg) -- Stocks hit record highs last week and energy futures retreated after Middle East tensions eased. But in some parts of the options markets, there are still signs of stress as investors position for potential geopolitical and macroeconomic upsets. Philadelphia Transit System Votes to Cut Service by 45%, Hike Fares Squeezed by Crowds, the Roads of Central Park Are Being Reimagined Sprawl Is Still Not the Answer Mapping the Architectural History of New York's Chinatown Sao Paulo Pushes Out Favela Residents, Drug Users to Revive Its City Center In the short term, equity investors are getting more bullish, with the premium for puts shrinking. But longer term, skew has barely changed, signaling less enduring optimism. Likewise, longer-dated futures on the Cboe Volatility Index have remained higher, showing more deferred angst around the economic impact of tariffs. 'Derivative markets have not fully returned to February levels,' Rocky Fishman, the founder of research firm Asym 500 LLC, wrote in a note Friday. 'This shows a justifiable lasting effect of April's volatility. The VIX futures curve has steepened, leaving the six-month area of the curve at a level that was rare in much of 2023-24.' There were signs of VIX call buying last week, when the Cboe VVIX Index — the so-called vol of vol — dropped below 90, which has been the lower end for the measure since last July. Oil markets are also slow to fully recover from the Israel-Iran conflict, even as attention is turning back to economic and fundamental factors. Brent implied volatility has fallen to the levels from early June, and the skew is flat, indicating there's no bullish or bearish bias. Still, bets for crude swings hold a wider premium to equities, after the S&P 500 Index's rally to a peak has put options under pressure. In a note last week, JPMorgan Chase & Co. derivatives strategists including Emma Wu suggested equity-oil hybrid trades, saying crude prices could rise should Middle East stress flare back up just as stocks may fall with interest rates staying higher for longer. While correlation between the two asset classes recently reached a high, they highlighted that the relationship tends to turn negative in periods of geopolitical tension. The fast-evolving geopolitical situation has given many investors whiplash. Hedge funds and other large money managers cut their net-long positions in Brent crude futures and options by the most since early April in the week through June 24, according to ICE Futures Europe data, after building up the largest bullish position in 11 weeks. And it's not just for oil. In the European natural gas market, trend-following Commodity Trading Advisors flipped to 18% net shorts from 9% net longs last Tuesday, according to data from Bridgeton Research Group LLC. The algorithms often exacerbate market moves, making it harder for traders with physical exposure to navigate the market. One area that has seen a rare influx of investor interest has been calendar spreads on crude oil, with options open interest reaching a record high this month. In an unusual situation, traders had bet that short-term tightness could reverse to a glut as OPEC and other producers add barrels to the market just as an uncertain economic outlook risks crimping demand. That 'hockey-stick' shaped curve — which disappeared due to the Israel-Iran attacks — has reverted to where it was three weeks ago. 'The sharp drop in the geopolitical risk premium likely reflects traders' recent experiences with major geopolitical shocks without significant oil disruptions, Iran's restrained response, strong US and China incentives to avoid large disruptions, and the likely shift to large inventory builds from the fall,' Goldman Sachs Group Inc. analysts including Yulia Zhestkova Grigsby and Daan Struyven wrote in a note. --With assistance from Alex Longley. America's Top Consumer-Sentiment Economist Is Worried How to Steal a House Inside Gap's Last-Ditch, Tariff-Addled Turnaround Push Apple Test-Drives Big-Screen Movie Strategy With F1 Luxury Counterfeiters Keep Outsmarting the Makers of $10,000 Handbags ©2025 Bloomberg L.P.
Yahoo
13 hours ago
- Business
- Yahoo
Options Markets Show Traders Reposition as Mideast Tension Fades
(Bloomberg) -- Stocks hit record highs last week and energy futures retreated after Middle East tensions eased. But in some parts of the options markets, there are still signs of stress as investors position for potential geopolitical and macroeconomic upsets. Philadelphia Transit System Votes to Cut Service by 45%, Hike Fares US Renters Face Storm of Rising Costs Squeezed by Crowds, the Roads of Central Park Are Being Reimagined Sprawl Is Still Not the Answer Mapping the Architectural History of New York's Chinatown In the short term, equity investors are getting more bullish, with the premium for puts shrinking. But longer term, skew has barely changed, signaling less enduring optimism. Likewise, longer-dated futures on the Cboe Volatility Index have remained higher, showing more deferred angst around the economic impact of tariffs. 'Derivative markets have not fully returned to February levels,' Rocky Fishman, the founder of research firm Asym 500 LLC, wrote in a note Friday. 'This shows a justifiable lasting effect of April's volatility. The VIX futures curve has steepened, leaving the six-month area of the curve at a level that was rare in much of 2023-24.' There were signs of VIX call buying last week, when the Cboe VVIX Index — the so-called vol of vol — dropped below 90, which has been the lower end for the measure since last July. Oil markets are also slow to fully recover from the Israel-Iran conflict, even as attention is turning back to economic and fundamental factors. Brent implied volatility has fallen to the levels from early June, and the skew is flat, indicating there's no bullish or bearish bias. Still, bets for crude swings hold a wider premium to equities, after the S&P 500 Index's rally to a peak has put options under pressure. In a note last week, JPMorgan Chase & Co. derivatives strategists including Emma Wu suggested equity-oil hybrid trades, saying crude prices could rise should Middle East stress flare back up just as stocks may fall with interest rates staying higher for longer. While correlation between the two asset classes recently reached a high, they highlighted that the relationship tends to turn negative in periods of geopolitical tension. The fast-evolving geopolitical situation has given many investors whiplash. Hedge funds and other large money managers cut their net-long positions in Brent crude futures and options by the most since early April in the week through June 24, according to ICE Futures Europe data, after building up the largest bullish position in 11 weeks. And it's not just for oil. In the European natural gas market, trend-following Commodity Trading Advisors flipped to 18% net shorts from 9% net longs last Tuesday, according to data from Bridgeton Research Group LLC. The algorithms often exacerbate market moves, making it harder for traders with physical exposure to navigate the market. One area that has seen a rare influx of investor interest has been calendar spreads on crude oil, with options open interest reaching a record high this month. In an unusual situation, traders had bet that short-term tightness could reverse to a glut as OPEC and other producers add barrels to the market just as an uncertain economic outlook risks crimping demand. That 'hockey-stick' shaped curve — which disappeared due to the Israel-Iran attacks — has reverted to where it was three weeks ago. 'The sharp drop in the geopolitical risk premium likely reflects traders' recent experiences with major geopolitical shocks without significant oil disruptions, Iran's restrained response, strong US and China incentives to avoid large disruptions, and the likely shift to large inventory builds from the fall,' Goldman Sachs Group Inc. analysts including Yulia Zhestkova Grigsby and Daan Struyven wrote in a note. --With assistance from Alex Longley. America's Top Consumer-Sentiment Economist Is Worried How to Steal a House Inside Gap's Last-Ditch, Tariff-Addled Turnaround Push Apple Test-Drives Big-Screen Movie Strategy With F1 Luxury Counterfeiters Keep Outsmarting the Makers of $10,000 Handbags ©2025 Bloomberg L.P.
Yahoo
19-06-2025
- Business
- Yahoo
A $6.5 Trillion ‘Triple Witching' Heralds Return to Volatility
(Bloomberg) -- Investors are bracing for $6.5 trillion of notional US options expiring on Friday, in a move that could free stocks to swing more wildly than the subdued changes seen in recent weeks. Security Concerns Hit Some of the World's 'Most Livable Cities' JFK AirTrain Cuts Fares 50% This Summer to Lure Riders Off Roads Taser-Maker Axon Triggers a NIMBY Backlash in its Hometown How E-Scooters Conquered (Most of) Europe One Architect's Quest to Save Mumbai's Heritage From Disappearing Every quarter, a cluster of different exchange-traded derivatives contracts all terminate on the same day, leading to what is sometimes dubbed a 'triple witching' event by market watchers. The event isn't expected to add additional volatility on Friday itself, but could open a path to more sudden stock market moves next week. Daily gyrations in US stocks have been relatively restrained since early May, a situation helped by the pinning effect of a swath of bearish options trades placed earlier in the year — when the chances of the S&P 500 making a recovery to near-record highs seemed remote, according to Rocky Fishman, the founder of research firm Asym 500 LLC. 'Pinning' refers to the tendency of a stock price to close near the strike of heavily-traded options as the expiration date nears. During the height of tariff-driven volatility in early April, many pessimistic investors bought insurance against a further drop in stocks, funding those positions by capping upside a little beyond the S&P 500's current level of 5,981. 'People might have seen a 6,000 level as something that's really hard to get to as we were dealing with a lot of the tariff drama over the last few months, and therefore sold calls in the 6,000 range as a way of funding protection at various points,' said Fishman, who called Friday's expiry 'one of the largest ever' in a recent note. The way market makers and broker-dealers have to hedge their own books can have major implications and echo back into equity markets. Fishman says dealer hedging could be a contributing factor to the fairly placid state of equity markets since early May, despite turmoil in the Middle East and continued tariff talks. To Fishman, the market is in a state known as positive gamma, which means players can be incentivized to sell into rallies and buy dips. It was different during early April's tariff turmoil, when many intermediaries found themselves having to dump stock into falling markets, and then buy it back as markets rose, exacerbating swings, according to Matthew Thompson, co-portfolio manager at Little Harbor Advisors. Thompson pays attention to expiry events like the triple-witching because it can help the equity ETFs he manages alongside his brother Michael take tactical positions in volatility markets. 'We're mostly interested in the dealers and how they have to hedge all of that exposure,' Thompson said in an interview on Wednesday. The quarterly triple-witching days are not usually much more volatile than monthly options expiry events, according to a study by Vishal Vivek and Stuart Kaiser, strategists at Citigroup Inc. Still, Friday's event is 'notable,' the pair wrote recently to clients. There is no standard way to calculate the amount of listed-derivatives due to expire on any one day - it depends which type of asset class and contract one includes in the figure. Citi estimates that Friday will see $5.8 trillion of notional open interest across equities expire, including $4.2 trillion of index options, $708 billion of bets on US ETFs and $819 billion of single stock options. Fishman's larger figure of roughly $6.5 trillion also includes the notional value of options on equity index futures expiring on Friday. Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros Is Mark Cuban the Loudmouth Billionaire that Democrats Need for 2028? The US Has More Copper Than China But No Way to Refine All of It How a Tiny Middleman Could Access Two-Factor Login Codes From Tech Giants Can 'MAMUWT' Be to Musk What 'TACO' Is to Trump? ©2025 Bloomberg L.P.
Yahoo
16-06-2025
- Business
- Yahoo
Big Tech's Furious Rally Forces Options Pros to Line Up Hedges
(Bloomberg) -- Big Tech has led the furious rebound in US stocks from the tailspin that followed President Donald Trump's sweeping April 2 tariff edict. Now options traders are signaling that they see the pricey cohort as especially vulnerable to another round of trade war-driven volatility. Shuttered NY College Has Alumni Fighting Over Its Future Do World's Fairs Still Matter? As Part of a $45 Billion Push, ICE Prepares for a Vast Expansion of Detention Space NYC Renters Brace for Price Hikes After Broker-Fee Ban As American Architects Gather in Boston, Retrofits Are All the Rage The cost of protecting against a correction in the Invesco QQQ Trust Series 1 exchange-traded fund, which tracks the tech-heavy Nasdaq 100 Index, is climbing with less than a month to go until Trump's 90-day pause on reciprocal tariffs potentially ends. On Friday, the relative price of hedging against a 10% decline in the ETF, compared with a similar rally, hit its highest level since early April. The growing skepticism toward the megacap rally shows investors are well aware of the risks, should trade tensions flare again and reignite worries around the US economic outlook. The tech behemoths fell harder than the broad market during the early April turmoil, and some investors see a threat that it could happen again. 'Right now, high valuations, and to some extent economic impacts of the tariffs, are still worries,' Rocky Fishman, founder of research firm Asym 500, said in an interview. Helped by a positive earnings season, a Bloomberg gauge of the Magnificent Seven — Nvidia Corp., Microsoft Corp., Tesla Inc., Apple Inc., Alphabet Inc., Inc. and Meta Platforms Inc. — has rallied 31% since April 8, the day before Trump paused most of his harshest tariffs. Meanwhile, the S&P 500 Index is up 20%. Besides trade-war fears, there are other reasons for concern about the group, such as the amount of cash they're throwing at artificial intelligence. That spending is fueling concerns about profit margins, and investors have high expectations that those expenditures will pay off. High valuations present another worry. Bloomberg's Magnificent Seven gauge is trading at 29 times projected profits, above a 10-year average of 28. That compares with the S&P 500's forward multiple of 22. Earlier this month, Needham analysts downgraded Apple's stock to a hold rating, warning that the company's valuation looks 'expensive on several metrics.' They also cited the iPhone maker's vulnerability to US tariffs. The uptick in demand for hedges underscores investor doubts about the staying power of the current rally, Fishman said. 'With these reluctant rallies, where people don't feel too excited and they just see the market keep on going up, then you start seeing investors getting nervous about giving up the gains they've picked up,' said Fishman. American Mid: Hampton Inn's Good-Enough Formula for World Domination The Spying Scandal Rocking the World of HR Software New Grads Join Worst Entry-Level Job Market in Years As Companies Abandon Climate Pledges, Is There a Silver Lining? The $7 Billion Nicotine-Pouch Market's Next Target? Women ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
