With the pandemic limiting many choices this year, investors dove into options. Bad pun, but the statistics are astounding. Check out the following few data points:

• Around 39M options contracts have traded daily on average this year, rising 35% from 2020 and the highest level ever - Options Clearing Corp.

• Retail investors represent more than 25% of total options trading activity due to access via commission-free brokers - Alphacution Research Conservatory.

• The average daily notional value (volume multiplied by spot price) of traded single-stock options climbed to more than $450B in 2021, compared with $405B for stocks - Cboe Global Markets.

What's fueling the surge? Hot trading apps and social media hype has seen retail crowd pour into the market since competition between brokerages eliminated trading fees in 2019. While stocks were the initial focus, much of the attention today centers around options, which allow traders to notch big returns (or losses) without having to actually purchase shares. Besides the leverage, many investors are also using derivatives as a hedge, such as protecting their portfolios against sentiment changes - a good example of this was the recent Fed meeting.

It's also been a big win for the brokerages, which are scoring some big bucks off the options rage. Popular brokerage Robinhood (NASDAQ:HOOD) even generated $164M from options trading in the third quarter, more than triple its transaction-based revenue from traditional stock trading. Activity has also been prominent in the so-called meme stocks, which initially created massive short squeezes in names like GameStop (GME) and AMC (AMC), but eventually created a swarm trading strategy of its own.

Some caution: The increased engagement is attracting the attention of regulators like the Financial Industry Regulatory Authority. Wall Street's self-regulatory arm is considering whether changes to the options rules may be warranted, including regulations around options account approvals, supervision and margin requirements. FINRA's request for comment will be published in the coming weeks to solicit insight from exchanges and brokers about options trading and the risks involved.

Student loans

In the wake of the Omicron variant spreading rapidly across the globe, the White House is extending the pause on federal student loan repayments by an additional 90 days until May 1, 2022. "We know that millions of student loan borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments," President Biden said in a statement, despite the unemployment falling to 4.2%. It's even less among college graduates with a bachelor's degree, with the rate tumbling to 2.9% in November.

Backdrop: The moratorium began in March 2020, when former President Trump signed the CARES Act into law, pausing payments through September 2020 and eliminating interest rates for the about 42M borrowers. Trump later took executive action to extend the deferral period through January 2021, while Biden signed another order when he came into office, continuing it through Sept. 30, and then eventually Jan. 31, 2022. At the time, the Education Department said that it would be the "final extension," while a "definitive end date" would reduce the risk of delinquency and defaults once the payments restart.

Meanwhile, Congressional Democrats like Senate Majority Leader Chuck Schumer and Massachusetts Sen. Elizabeth Warren have been pressuring Biden to take executive action to wipe out up to $50K in student loan debt for all borrowers. While he has gone on record saying he doesn't believe a president has the authority to cancel student debt unilaterally, Biden would support Congress passing a bill to cancel $10K in debt for each borrower. About 62% of voters support some form of student loan forgiveness, according to a recent poll by Morning Consult, but ideas differ about how much debt should be forgiven and for whom.

Outlook: The Federal Reserve estimated that Americans owed $1.75T in student loans in the third quarter of 2021, with the average debt around $40,000 per borrower. Related student loan stocks include Sallie Mae (NASDAQ:SLM), Navient (NASDAQ:NAVI) and Nelnet (NYSE:NNI)

Unwinding portfolio

JD.com (JD) is having a rough morning, with shares of the Chinese e-commerce giant skidding 7% in premarket trade. Prompting the slide was news from technology conglomerate Tencent (OTCPK:TCEHY), which said it would give away most of the shares it holds in the company to its shareholders. The plan will come in the form of a special dividend, where it will dole out 457M shares of JD.com, worth roughly $16.4B.

By the numbers: Tencent currently holds a strategic stake of nearly 17% in JD.com and the distribution will leave it with a 2.3% stake in the company.

In an accompanying filing, Tencent said part of its strategy includes early investment in companies to support development, but to exit them when they become "consistently capable of self-financing their future initiatives." Some are still pointing to China's domestic tech sector crackdown, which has impacted firms like Alibaba (BABA) and Meituan (OTCPK:MPNGY) over the past year. It might be worth offloading a massive tech stake before the CCP comes knocking.

Analyst commentary: "I think that basically it's Tencent's choice, right, to gradually reduce those shares and try to show to the public that you know... 'we're not that big as you think,'" said Blue Lotus Capital Advisors' Shawn Yang. "That probably can reduce some of the concerns of its size and influence."

Final challenge

The Supreme Court has agreed to hear legal challenges to two of the Biden administration's COVID-19 vaccine mandates, but will leave lower court orders in place until the oral arguments begin on Jan. 7. The first order, which is estimated to cover two-thirds of the private sector, would compel businesses with 100 or more employees to ensure their staff is vaccinated against COVID or is tested weekly for the virus. A separate healthcare worker mandate, which would require vaccinations for workers at facilities that treat federally funded Medicare and Medicaid patients, is already blocked in half of the 50 U.S. states.

Snapshot: Last week, the 6th Circuit U.S. Court of Appeals reinstated the mandate for large businesses, though parties challenging the rule asked the Supreme Court to review the case. The group includes 27 states with Republican attorneys general or governors, private businesses, religious groups, and national industry associations like the National Retail Federation and the American Trucking Associations. Employers who don't adhere to the requirements could face penalties of up to $13,653 for each reported violation, while the Occupational Safety and Health Administration will check on compliance through company record-keeping and some in-person inspections.

"Especially as the U.S. faces the highly transmissible Omicron variant, it is critical to protect workers with vaccination requirements and testing protocols that are urgently needed," White House Press Secretary Jen Psaki said in a statement. "At a critical moment for the nation’s health, the OSHA vaccination or testing rule ensures that employers are protecting their employees and the CMS health care vaccination requirement ensures that providers are protecting their patients."

How dangerous is Omicron? There are still many mixed signals out there, but newly released results from the U.K. indicate that patients infected with the variant are less likely to be admitted to hospitals compared to the Delta strain. That adds to earlier findings showing that South Africans are 80% less likely to be hospitalized if they catch Omicron. In the case that they are hospitalized, however, the risk of serious disease is the same.

Today's Markets

In Asia, Japan +0.8%. Hong Kong +0.4%. China +0.6%. India +0.7%.
In Europe, at midday, London +0.2%. Paris +0.3%. Frankfurt +0.5%.
Futures at 6:20, Dow +0.3%. S&P +0.2%. Nasdaq +0.1%. Crude -0.1% at $72.72. Gold +0.2% at $1806.50. Bitcoin -1.5% at $48440.
Ten-year Treasury Yield unchanged at 1.44%

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Durable Goods
8:30 Personal Income and Outlays
10:00 New Home Sales
10:00 Consumer Sentiment
10:30 EIA Natural Gas Inventory
1:00 PM Baker-Hughes Rig Count
4:30 PM Fed Balance Sheet

Companies reporting earnings today »

What else is happening...

First oral antiviral: Pfizer (NYSE:PFE) COVID pill granted FDA authorization.

Novavax (NASDAQ:NVAX) rises 5% on positive early COVID vaccine data.

U.S. Army develops vaccine effective against all variants, including Omicron.

AWS (NASDAQ:AMZN) said to see antitrust scrutiny from FTC's Lina Khan.

Apple (NASDAQ:AAPL) can grow in 2022 despite supply challenges - Citigroup.

Tesla (NASDAQ:TSLA) rips higher as Musk share sale puts risk in rear-view mirror.

Unfazed by natural gas prices, Dutch announce cut to coal power as of Jan. 1.

Twitter spat: Jack Dorsey spars with VCs about the future of Web 3.0.