The Long & Short of Futures Options

We took a look a the best episodes from 2016 to pull our favorite segments and interviews, including:

• Akuna Capital at FIA Boca
• Derek Sammann at FIA Expo with Nick Howard
• Brexit; post-Election with Blu Putnam
• Weekly Wednesday with Tim McCourt

In this episode, we feature Blu Putnam, Chief Economist, CME Group.

He discusses:

• Looking back at pre- and post-election volatility environments: A Tale of Two Volatility Regimes.
• Was the ferocity of the selloff in the overnight session surprising?
• Were there any interesting quirks or trends in CME options and futures volume that day/night?
• An overview for volatility going forward
• Nine Challenges Facing Markets Post-U.S. Election

Listener Mail: Listener questions and comments

Options#QuestionOfTheWeek: Commodities are capturing a lot of attention and generating a lot of volatility. What's your option of choice?

• $GLD / Comex Gold
• $USO / $WTI
• $TLT / ED / 10YR
• EUR/USD, GPB/USD
• Question from Alan McKay: I am starting my undergrad next year and I am thinking about majoring in economics with a concentration in derivatives. Any suggestions for programs?
• Question from Invern3ss: I have a theory regarding why WTI Weekly options don’t trade as much as the monthlies. Could it be because the vast majority of customers are using the product to hedge existing long positions by purchasing puts. So a weekly would not be suited to their needs since it would just waste too much money through decay. Thanks for your great network. Please keep the shows coming. I’m a proud listener, newsletter subscriber, website reader and app user.

Coming to you from the Futures Industry Conference in Chicago, Mark is joined by Nick Howard, founder of QuikStrike and Derek Samman, CME Group Senior Managing Director and Global Head of Commodities Options and Products.

They discuss:

• The great year that CME has been having in 2016
• This outsize growth was fueled by options
• What trends are we seeing in futures options?
• Are retail traders becoming more active in futures options?
• The trend towards trading on microevents
• The short-duration expiration options. Will there be daily expiration options?
• Crude! Puts are still very expensive
• Natural gas options business grew 40% year-over-year
• Soybeans driven by volatility and volatility skew
• 72% of ag options are trading electronically
• Managing options flow outside of seasonal patterns
• Metals! It's been an interesting year.
• Gold call bias...the rent is cheap
• Don't forget the less sexy metals
• What can we look forward to from CME in the next year?

On this episode, Mark is joined by Blu Putnam, Chief Economist, CME Group and Tim McCourt, Global Head of Equity Products, CME Group.

They discuss:

• What are some potential drivers of market volatility?
• Paper: Equity Volatility in 2016 and Beyond
• Paper: Calm Before the Volatility Storm in Equities?
• What are some potential drivers of volatility in the near future?
• Earnings season
• The election
• The Fed?
• What impact, if any, will these have on the broad equity markets?
• Rise of the Weeklies
• Why launch a Wednesday weekly? What additional value does this product bring to customers?

Listener questions: Discussing what you want to know

• Question from Vegs - I am seeing lots of big fat options OI tied to the big ES 2200 strike. Does this mean big traders are betting that the S&P will rally past 2200? Can all of this open interest have the net effect of forcing the S&P to that strike at expiration? Do you view this open interest solely coming from pros or are retail reflected there as well?
• Question from TCal - I am a somewhat new oil options trader primarily in WTI. Over the last few months I have noticed that the majority of volume trades in the front month. This is particularly true in active weeks such as during the OPEC meeting. I have had success buying weekly options going into these events. But in these same active periods I have not seen the surge of activity in the weekly WTI that I expected. This is surprising given the similar interest in weeklies in most other option products. Is this a function of the large institutional presence in WTI options? Perhaps there is a nuance of the product that I am missing that is not conducive to weeklies? I would appreciate your insight into this. Thank you for producing so much great free programming on your network.

In light of the CME's Metals Conference, Mark takes the show on the road and brings together a New York-style round table including:

• Nick Howard: Founder of Bantix Technologies
• Miguel Vias: Senior Director and Head of Precious Metals, CME Group
• Erik Norland, Senior Economist, CME Group

They discuss:

• All things precious metals, and Erik's paper "Gold Storm on the Horizon"
• What has happened to gold skew post-Brexit?
• What is going on in gold vol? What will drive it higher?
• Silver: the stepchild to gold?
• Eriks' most recent paper, "Gold and Silver: Fed Rake Hike vs. Mine Output"
• The forward curve does not allow for any Fed increases
• The relationship between gold and silver
• The new metals-related products coming soon from CME

Host:

• Mark Longo, Founder & CEO, Options Insider Media Group

Guests:

• Dan Passarelli, Founder - Market Taker Mentoring
• Todd Rich, President - OptionMonster Media
• Sarah Linane, Sr. Futures Specialist - OptionsHouse & Aperture Group, LLC

Topics

On this episode of LSFO we take a deep dive into all things volatility. We explore the impact of volatility and explore options trading strategies in the following product categories:

• Index Options
• Crude Oil
• Precious Metals
• Ags
• and more...

Listener Mail: Listener questions and comments

• Question from AL08: IV or HV - Which is most important? Which should I pay attention to?
• Question from Cristoff: Do you guys only trade options or do you trade futures too? How do you decide when to use which?
• Question from Tim: Size aside, what are the other primary benefits of trading ES options instead of SPY?

In this epsiode, we have two special guest hosts: Erik Norland, Senior Economist at CME Group, and Scott Shellady, Senior Vice President of Derivatives at TJM Investments.

They discuss:

• The FOMC meeting and not raising rates after a disappointing non-farms number
• The different employement numbers and how they are derived
• The likelihood of rate hikes for the rest of the year, and into 2017
• Brexit: will they? Won't they?
• Is Brexit just another Y2K?
• Where is the economic growth going to come from?
• An addendum to last month's discussion on soybeans

Today Mark is joined by Nick Howard, Managing Principal of Bantix Technologies, Eric Norland, Senior Economist at CME Group, and John Nelson, President of the Applied Research Company.

They discuss:

• The different kind of soybean products
• The big move in beans and why that happened
• The swing from oversupplied to not
• Soybean hoarding in Argentina
• Are volatility and price correlated?
• What about China?
• The favorable conditions for a risk reversal
• What does the data show?
• The impact of el nino and la nina on soybean prices
• The phenomenon of el nino and la nina
• A well-timed report on the new research from CME
• How will the Fed impact gold?
• Gold volatility and its correlation to relative volatility
• And more

In this episode, Mark is joined by Andy Nybo, the head of research and consulting at the TABB Group, and Jared Woodard of Condor Options.

They discuss:

• The recent report released by the TABB Group and CME: Options on Futures, Use Cases in Efficient Risk Management.
• The growth trajectory of the use of futures options
• Why are people using futures options rather than different products?
• Options flow in crude oil and related products
• The equity and index landscape relative to futures options
• The influx of retail investors into the futures options space
• The resurgence of interest rate instrument activity
• Interest in foreign exchange instruments

In this epsiode, Mark beams in from sunny Boca Raton, Florida, where he was enjoying the FIA Conference. There, he was joined by Blu Putnam, Chief Economist at CME Group, and Mitchell Skinner, co-founder of Akuna Capital.

They discuss:

• How it's been interesting to watch crude oil and gold
• What is driving volatility in both?
• Inventories are high, so people are doing a cash-and-carry
• What happens when there is high volatility?
• Last year's "Gold Storm on the Horizon" paper
• Revisiting the view on gold, espeically gold skew
• Looking for the trading range
• Ag trading and el nino / la nina
• The shift from pit to electronic trading in the ags
• What's happening in FX?
• What is going to hapen with the British vote to join the EU?