TWIFO 182: Kicking Off A New Decade of Futures Options

  • HOST: MARK LONGO, THE OPTIONS INSIDER MEDIA GROUP
  • CO-HOST: SEAN SMITH, MD OF DERIVATIVES LICENSING, FTSE RUSSELL

CME Group Reports 2019 Annual Volume and Monthly Market Statistics – https://www.cmegroup.com/media-room/press-releases/2020/1/03/cme_group_reports2019annualvolumeandmonthlymarketstatistics.html

  • Average daily volume (ADV) of 19.2 million contracts during the year and 15.5 million contracts during the month of December. 
  • Open interest at the end of December was 113 million contracts. Market statistics are available online in greater detail at https://cmegroupinc.gcs-web.com/monthly-volume.
  • Annual highlights across asset classes include:
    • Record 40 trading days with volume over 25 million contracts, up 29% from 35 days in 2018
    • Record Interest Rate ADV of 10.3 million contracts per day, up 4% from 2018
    • Record Metals ADV of 668,000 contracts per day, up 5% from 2018
    • Record Options ADV of 4 million contracts per day, up 2% from 2018

EQUITIES

  • VIX: 12.95 – UP .45 ROM LAST SHOW
  • VVIX:89.5 –  DOWN 9.25 FROM LAST SHOW
  • RVX: 15 – UP .75 FROM LAST SHOW 
  • VIX/RVX SPREAD – APPROX. 2 – AROUND THE SAME AS LAST SHOW
  • RUSSELL 2000 2019 PERFORMANCE
    • UP NEARLY 24% IN 2019
    • OPENED THE YEAR AT 1346
    • ENDED THE YEAR OVER 1600 – CLOSED AT 1668

In 2020, Equities Are Partying Like It’s 1999 By Erik Norland – https://www.cmegroup.com/education/featured-reports/in-2020-equities-are-partying-like-its-1999.html

  • At the beginning of the 1990s, the US economy was heading into a recession, plagued by a crisis of small banks (saving and loans) and bad real estate loans.  The Federal Reserve (Fed) was slashing rates, from 9.75% to 3%.  
  • At the beginning of the 2010s, the US unemployment rate was nearly 10%.  The banking system was just beginning to recover from its most severe crisis since the 1930s.  Housing prices had collapsed nationwide. The Fed was experimenting with zero rates and quantitative easing.
  • Superficially, the beginning of the 2020s looks a great deal more like the state of the world in 2000 than in 1990 or 2010.  Unemployment is below 4%. There are no obvious problems with the banking system. Real estate prices are on a modest upward trend but don’t appear to be in bubble territory (at least not in most of the US).  Energy and materials prices are far from historical highs.

METALS

2019 In Review: A Record Year for CME Metals Products – https://www.cmegroup.com/education/metals-update/2020-q1-metals-update.html

  • Combined Futures and Options Average Daily Volume (ADV) was 668,327 contracts in 2019, a new record. Metals F&O have now set annual volume records in 4 consecutive years. 
  • Metals ADV increased 20% from December 2018, driven by 22% growth in precious metals futures and options and 15% growth in base metals futures and options
  • Average combined Metals Open Interest of 3,662,788 contracts also set a record in 2019, showing consistent growth as volume increased.
  • Gold Futures Open Interest set a record on December 31 of 786,166 contracts.

GOLD 

  • Gold Prices Rise Above $1,600 on Simmering U.S.-Iran Tensions 

Shanghai Gold Futures Contracts Debut with Deep Liquidity and Robust Volume

  • Since their debut on October 14, a combined 42,719 contracts have traded in the SGU (USD Denominated) and SGC (CNH) contracts. 

Use COMEX Copper Options to Manage Copper Price Risk

  • Copper options average daily volume in 2019 was 2,812 contracts, up 101% YoY.

COMEX Aluminum Suite Continues to Grow

  • CME’s physically deliverable Aluminum Futures contract continues to gain traction, with Q4 average daily volume reaching 139 contracts (3,475 metric tons), 
  • 2019 Average Daily Volume across CME’s suite of Aluminum Futures contracts was 671 contracts, up 9% vs 2018 (Q4 1,057 up 82% vs Q4 2018).

CRUDE

  • Oil prices jumped 5 per cent after Iran launched strikes against US military bases in Iraq in retaliation for the killing of commander Qassem Soleimani. But by Wednesday afternoon gains in crude had reversed, with prices trading lower than before the Iranian general’s assassination.
  • BRENT CRUDE: Having jumped when markets opened to as high as $71.75 a barrel, crude later dropped to below $66 a barrel, a near 9 per cent peak-to-trough swing in the course of a day.
  • WTI: TOPPED OUT AT $63.27 – BEFORE DROPPING BACK BELOW $60 AGAIN. Oil tanker groups are taking a wait-and-see approach – Saudi Arabia, the world’s biggest crude exporter and a key US ally, has temporarily suspended shipments through the Strait of Hormuz, the narrow waterway separating the Gulf from Iran where 20 per cent of global oil supplies pass daily.
  • However, Frontline, the world’s largest oil tanker operator, said that while it was “monitoring the situation closely” it had not “suspended trading in the area”.
  • Opec and allies can ALWAYS increase supplies – 
  • “Not a single drop of oil supply has been lost due to the recent incidents and this is why the oil price has fallen back down again so quickly,” said Bjarne Schieldrop, chief commodities analyst at Norwegian bank SEB.

CRYPTO

Options on Bitcoin Futures. Coming January 13, 2020 – https://www.cmegroup.com/cme-group-futures-exchange/options-bitcoin-futures.html?utm_source=pardot&utm_medium=email&utm_campaign=bitcoin_options_launch&utm_content=email4_prelaunch

FUTURES OPTIONS FEEDBACK

  • QUESTION FROM ABHISHEK JAIN: dear sir, can you share a fee source of U.S. commodity option chain  preferably gold and crude oil
  • QUESTION FROM STEVE WIM: What was a weird trend that came on your radar in 2019?
  • QUESTION FROM BKL61: What is the proper time frame for trading futures options? In case you can’t tell i’m pretty new to trading. Just discovered the program and I’m loving it and learning a ton. Thank you so much!.
  • QUESTION FROM DEMOCAT: Are there any plans for mini (micro) russell options?

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