Morning Reads

Morning Reads




It's triple witching day, which refers to the simultaneous expiration of stock options, market index options and market index futures. The event can lead to higher volatility and more trading volumes, giving speculators an opportunity for quick arbitrage opportunities. It happens four times a year - on the third Friday of March, June, September and December - with much of the increases in activity taking place during the last hour of trading, otherwise known as the "witching hour."

Snapshot: Interestingly, the day used to be called quad witching, but single stock futures ceased trading when the OneChicago exchange closed up shop in September 2020. Volume spikes happen as positions are closed out, while the rolling over of contracts also boosts turnover. This time around, options tied to around $5T in stocks and indexes are due to expire. It comes on the heels of strong stock options volume in March, which is on track to exceed trading in equities for the first time since late 2021.

"Triple witching does not directly move the market higher or lower, all it does is temporarily increase trading volume and liquidity," noted SA analyst Marcia Wendorf. "The increased volume and price fluctuations triggered by triple witching cause traders to take action on the underlying assets. This brings in arbitrageurs who use high-frequency trading to try to take advantage... and knowing that can go a long way toward preventing emotional responses to market movements.

What to watch: While triple witching is important for traders, the broader market is also keeping tabs on the event. Call-heavy expirations can agitate stocks, especially when there has been high demand for large-weighted players like Nvidia (NVDA), and all of the main stock indices fell last week in the leadup to the witching. The move lower also followed a mixed jobs report, with subsequent hotter inflation readings on CPI and PPI, and another session in the red today could see the S&P 500 (SP500) notch a second straight weekly loss for the first time since October.

At it again

Only a week after putting together a $1B lifeline for NYCB (NYCB), former Treasury Secretary Steve Mnuchin is rounding up the investors to acquire TikTok. The news comes after the U.S. House passed a bipartisan bill that, if ultimately approved, would force Chinese parent firm ByteDance (BDNCE) to divest TikTok or face a nationwide ban on the app used by over 150M Americans. President Biden has said that if Congress passes a bill to ban TikTok, he will sign it. "This should be owned by U.S. businesses," Mnuchin declared. " There’s no way the Chinese would ever let a U.S. company own something like this in China." (124 comments)

Cold wallet

El Salvador, the world's first country to establish bitcoin (BTC-USD) as legal tender, is transferring a "big chunk" of its BTC to a physical vault. The cold wallet, which will keep the holdings offline, will be stored within the country's territory. "You can call it our first bitcoin piggy bank," President Nayib Bukele wrote on X. The move comes as the top cryptocurrency hit a record high of around $73,750 on Thursday on account of a bull run ahead of the April halving event, though it later slid below $70,000 as another hot U.S. inflation report bolstered bets that the Fed will not cut interest rates any time soon. (4 comments)

Out of town

Uber (UBER) and Lyft (LYFT) are halting operations in Minneapolis starting on May 1. A vote by the city council overrode Mayor Jacob Frey's veto of a pay hike ordinance, meaning ride-hailing services will be required to raise driver wages to the local minimum of $15.57/hour. Critics previously warned that the ordinance would raise costs for customers and force the companies to exit the city. "We're disappointed the council chose to ignore the data and kick Uber out of the Twin Cities, putting 10,000 people out of work," Uber said in a statement, while Lyft reiterated that the "deeply flawed" rule makes its operations in the city unsustainable. (11 comments)

Today's Markets

In Asia, Japan -0.3%. Hong Kong -1.4%. China +0.5%. India -0.6%.
In Europe, at midday, London +0.1%. Paris +0.4%. Frankfurt +0.4%.
Futures at 7:00, Dow +0.1%. S&P +0.2%. Nasdaq +0.3%. Crude -0.6% to $80.76. Gold +0.3% to $2,173.70. Bitcoin -7.7% to $67,336.
Ten-year Treasury Yield -2 bps to 4.28%.

Today's Economic Calendar

8:30 Empire State Mfg Survey
8:30 Import/Export Prices
9:15 Industrial Production
10:00 Consumer Sentiment
1:00 PM Baker Hughes Rig Count

Companies reporting earnings today »

What else is happening...

United (UAL) close to swapping Boeing (BA) 10s for A321neo jets.

Adobe (ADBE) tumbles as forecast falls short of expectations.

Cleveland-Cliffs (CLFmay rebid for U.S. Steel (X) if Nippon deal dies.

Dollar General (DG) reverses course as inflation fears resurface.

Crude oil hits over four-month high as IEA forecasts market deficit.

Race accelerates: Apple (AAPL) buys Canadian startup DarwinAI.

Cisco (CSCO) deal to acquire Splunk (SPLK) gets EU approval.

SpaceX's (SPACE) Starship flies higher and faster in third test flight.

Lithium Americas (LAC) scores record DoE loan for Nevada project.

New York's first U.S. utility-scale offshore wind farm starts operations.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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