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CME Sounding Out Crypto Traders to Gauge Market Demand for Ether Futures, Options

CME Sounding Out Crypto Traders to Gauge Market Demand for Ether Futures, Options

CME headquarters, Chicago (Daniel J. Macy/Shutterstock)

The Chicago Mercantile Exchange (CME), the largest U.S. regulated market for bitcoin futures, has been sounding out cryptocurrency traders to gauge their interest in a listing of futures and options for the Ethereum blockchain’s native currency.

  • Darius Sit, founder and chief information officer at Singapore-based QCP Capital, told CoinDesk in an interview that CME had asked his firm whether it might be interested in trading ether (ETH) derivatives on the exchange.
  • Ether is the second-largest cryptocurrency by market capitalization, at $41 billion.
  • A CME Group spokesperson declined to comment when reached by CoinDesk, adding, “We don’t comment on whether or not we’re developing any products.”
  • The CME has become one of the leading venues for institutional investors to bet on bitcoin, following the launch of a futures contract in late 2017 and options earlier this year.
  • Partly due to the explosive development of decentralized finance (DeFi) this year, there has been rising demand from traders for ether derivatives that can be used to make leveraged bets on price moves or simply to hedge.
  • For now, the biggest venues for trading ether futures are on non-U.S. exchanges led by OKEx, Huobi and Binance, according to the data firm Skew.
  • CME previously launched an Ether-Dollar Reference Rate in May 2018 along with an Ether-Dollar Real Time Index, but as recently as June the exchange told CoinDesk it had “no plans to introduce additional cryptocurrency products.”
  • Vishal Shah, founder of bitcoin crypto derivatives exchange Alpha5, told CoinDesk in a Telegram message that he sees CME ether derivatives as “overdue.”
  • The chatter around CME’s rumored ether products launch also comes after U.S. regulatory authorities recently brought a series of civil and criminal charges against popular derivative exchange BitMEX.

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Is the Options Market Predicting a Spike in Gulfport Energy (GPOR) Stock?

Is the Options Market Predicting a Spike in Gulfport Energy (GPOR) Stock?

Investors in Gulfport Energy Corporation GPOR need to pay close attention to the stock based on moves in the options market lately. That is because the Jan 15, 2021 $1.00 Call had some of the highest implied volatility of all equity options today.

What is Implied Volatility?

Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

What do the Analysts Think?   

Clearly, options traders are pricing in a big move for Gulfport Energy shares, but what is the fundamental picture for the company? Currently, Gulfport Energy is a Zacks Rank #1 (Strong Buy) in the Oil and Gas – Exploration and Production – United States industry that ranks in Top 34% of our Zacks Industry Rank. Over the last 60 days, three analysts have increased their earnings estimates for the current quarter, while none have revised their estimates downward. The net effect has taken our Zacks Consensus Estimate for the current quarter from a loss of 21 cents per share to a loss of 20 cents in that period.

Given the way analysts feel about Gulfport Energy right now, this huge implied volatility could mean there’s a trade developing. Often times, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move

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Are oil dividends in danger? The options market doesn’t think so

Are oil dividends in danger? The options market doesn’t think so

Many investors are speculating that Big Oil dividends could be in danger given how low the price of crude has dropped this year, but in an appearance on CNBC’s “Squawk Box,” Chevron CEO Michael Wirth defended his company’s ability to keep its dividend intact.

“We continue to have a very strong balance sheet so our dividend is secure,” Wirth said Wednesday. “We’ve stress-tested the future scenarios at prices lower than what we’ve seen today and still have plenty of capacity to pay the dividends.”

Despite ongoing speculation, Wirth isn’t alone in his sentiment. The options market also doesn’t foresee a material cut to the stock’s dividend anytime soon.

“We can compare the price of a synthetic equity position, using options, to the actual equity. I was looking at the January 2022 options, and you can back out — using interest rates and the current price of the stock — essentially how much [of a cut] the options market is implying in terms of dividends,” Michael Khouw, chief investment officer at Optimize Advisors, said Wednesday on CNBC’s Fast Money.”

Since options don’t receive dividend payouts, the dividend for the underlying equity at a given expiration can be calculated based on how future contract premiums for an option are priced.

Essentially, if these synthetic positions are discounted compared with an actual equity position, the market is signaling some degree of likelihood that the dividend could be reduced between now and a given expiration. 

“Right now, [Chevron] is paying about $1.29 per quarter, there are five quarters that you would be receiving dividends between now and January 2022 expiration, and the cumulative dividends are probably about a dollar shy of what you would otherwise be getting.

“But is a discount like that material enough to think that the dividend is going to be

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Is the Options Market Predicting a Spike in Evolus (EOLS) Stock?

Is the Options Market Predicting a Spike in Evolus (EOLS) Stock?

Investors in Evolus, Inc. EOLS need to pay close attention to the stock based on moves in the options market lately. That is because the Nov 20, 2020 $4.00 Call had some of the highest implied volatility of all equity options today.

What is Implied Volatility?

Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

What do the Analysts Think?

Clearly, options traders are pricing in a big move for Evolus shares, but what is the fundamental picture for the company? Currently, Evolus is a Zacks Rank #2 (Buy) in the Medical – Products industry that ranks in the Top 48% of our Zacks Industry Rank. Over the last 60 days, three analysts have increased their earnings estimates for the current quarter, while none have dropped their estimates. The net effect has narrowed our Zacks Consensus Estimate for the current quarter from a loss of 68 cents per share to a loss of 50 cents in that period.

Given the way analysts feel about Evolus right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.

Looking to Trade Options?

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Is the Options Market Predicting a Spike in Kala Pharmaceuticals (KALA) Stock?

Is the Options Market Predicting a Spike in Kala Pharmaceuticals (KALA) Stock?

Investors in Kala Pharmaceuticals, Inc. KALA need to pay close attention to the stock based on moves in the options market lately. That is because the Nov 20, 2020 $10.00 Call had some of the highest implied volatility of all equity options today.

What is Implied Volatility?

Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

What do the Analysts Think?

Clearly, options traders are pricing in a big move for Kala Pharmaceuticals shares, but what is the fundamental picture for the company? Currently, Kala Pharmaceuticals is a Zacks Rank #3 (Hold) in the  Medical – Biomedical and Genetics industry that ranks in the Bottom 26% of our Zacks Industry Rank. Over the last 60 days, no analysts have increased their earnings estimates for the current quarter, while one analyst has revised the estimate downward. The net effect has widened our Zacks Consensus Estimate for the current quarter from a loss of 42 cents per share to a loss of 44 cents in that period.

Given the way analysts feel about Kala Pharmaceuticals right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.

Looking

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