This Week in Futures Options

Today's CME hot seat guest is Matt Bradbard from RCM ALTS. Topics this week include: Crude Oil WTI Gold Winners - Iron Ore, Nat Gas Losers - Silver, Copper Futures Options Feedback Question from Lil Nic - Updates on CME #bitcoin futures? Question from Nick - Update on your covered put spread from 11/10?

While you're in line for your Black Friday deals, why not check out the best of This Week in Futures Options?

This week we are featuring special guest Jeff White, Executive Director of Energy Products. Topics this week include: WTI Options Crude Oil Nat. Gas Winners - Rough Rice, Corn Losers - Lean Hogs, Lumber Futures Options Feedback: Listener Questions and Comments Question from Last J - Hello Mark, Nice and guest - Loving the podcast. I'm new to Crude, and I'm trying to wrap my head around WTI. You said WTI 6-mo calendar spread went backward for the first time in 3 years. So does that mean it's usually in contango? Is there a good way to trade this reversion? Also, where is the spread quoted? Can I trade it on most major platforms?

Bitcoin Madness Strikes the Audience #TWIFO Question of the week: Which options product do you want us to discuss live this Friday 1:30pm CT? Natural Gas Russell 2000 WTI Crude Oil Or...Bitcoin What Is Bitcoin Reference Rate? The CME CF Bitcoin Reference Rate (“BRR”) is a daily reference rate Of the U.S. Dollar price of one bitcoin as of 4:00 p.m. London time. It is representative of the bitcoin trading activity on Constituent Exchanges and is geared towards resilience and replicability. METHODOLOGY: Aggregation of trade executions occurring on Constituent Exchanges between 3:00 p.m. and 4:00 p.m. London time All Relevant Transactions are added to a joint list, recording the trade price and size for each transaction. The list is partitioned into 12 equally-sized time intervals of 5 minutes each. For each partition separately, the volume weighted median trade price is calculated from the trade prices and sizes of all Relevant Transactions, i.e. across all Constituent Exchanges. A volume weighted median differs from a standard median in that a weighting factor, in this case trade size, is factored into the calculation. The BRR is then given by the equally-weighted average of the volume-weighted medians of all partitions DISSEMINATION: Once per day, every day of the year including weekends and holidays, between 4:00 p.m. and 4:30p.m. London time Bitcoin Futures Contract Specs BRR: Currently $6811 SIZE: 5 bitcoin, as defined by the CME CF Bitcoin Reference Rate (BRR) Minimum Price Fluctuation: Outright: $5.00 per bitcoin = $25.00 per contract. Calendar Spread and Basis Trade at Index Close (BTIC): $1.00 per bitcoin = $5.00 per contract Position Limits: Spot Position Limits are set at 1,000 contracts. A position accountability level of 5,000 contracts will be applied to positions in single months outside the spot month and in all months combined. The reportable level will be 25 contracts. Price Limits: Special price fluctuation limits equal to 7% above and below prior settlement price and 13% above and below prior settlement price and a price limit of 20% above or below the previous settlement price. Trading will not be permitted outside the 20% above and below prior settlement price. Could Bitcoin Futures Rein in the Big Price Swings? After CME announced that they would soon be offering Bitcoin futures, the price of the digital currency took a big upward swing. However, CME is of the opinion that futures could actually put a stop to Bitcoin’s synonymous volatility. CME will be putting in place special price fluctuation limits that will help protect investors from the notorious price swings, but these same protections could also help ease the price swings and make the digital currency settle down somewhat. After CME announced that they would soon be offering Bitcoin futures, the price of the digital currency took a big upward swing. However, CME is of the opinion that futures could actually put a stop to Bitcoin’s synonymous volatility. CME will be putting in place special price fluctuation limits that will help protect investors from the notorious price swings, but these same protections could also help ease the price swings and make the digital currency settle down somewhat. Many believe that it is these violent swings that are stopping mass adoption of the digital currency, especially as a currency. If there was a more steady rate, then Bitcoin would be able to stretch more towards being a currency while still holding onto its power as a store of value. Other topics this week include: Crude Gold Futures Options Feedback: Listeners have their say Question from Vamp111: Ciao, anyone know when exactly CME Group will launch Bitcoin Futures?? Comment from tmal: IMO BTC initially has monster call skew. Bring BTC to the masses. Question from Folfox: Do you prefer iron condor vs. iron butterfly? (I know 1 strategy wont work every time, but what scenario is preferred) Comment from JNL09: Not sure about the bitcoin implied volatility stated on the show last week. I was sure its at least 200.

Topics this week include: Crude Oil Gold/Metals Wheat/Ags Winners: Live Cattle, RBOB Losers: Rough Rice, Lumber Futures Options Feedback: Options question of the week. Bitcoin just blew past $100B in "market cap." If #Options were available how would you trade them? Buy Calls/Call Spreads Buy Puts/Put Spreads Sell Covered Calls Other/Hate #Crypto Listener questions: Question from Mantauk - What is the actual implied volatility of bitcoin?

Topics this week include: Nasdaq Skew Crude Oil Gold/Metals Winners: Lumber, RBOB Losers: Iron Ore, Nat Gas Futures Options Feedback: Listeners have their say Question from Danubs - Can I buy options on milk? Question from Bxvets - What's your favorite sell signal? Question from Bullobo11 - What was your most recent and promising buy signal and how did you come across it? Question from AdmiralTweezers - Do you foresee any innovations in market making such that it might become less centralized or more crowdsourced? Question from Michaelbozzello - What's the most valuable lesson you learned as a market maker that you would tell retail traders trading options? Question from LL0C - Mine or not to mine? Do you guys rec mining bitcoin before trading it?

Today in the CME hot seat is Derek Sammann, CME Group Global Head of Commodities and Options Products. Topics this week include: Looking back on “Black Monday” Crude Oil/WTI Gold/Metals Winner this week: Lean Hogs Futures Options Feedback: Listeners have their say Comment form T6BTL - Big on Fed watch. Any other cool tech coming to the site? Options question of the week: Do you think #Options should be traded after-hours like stock? 71% - Yes! 25% - No! 4% - Don't Care!

Topics this week include: Gold Crude Oil Winners: Nat Gas, Palladium Losers: Class 3 Milk, Wheat Futures Options Feedback: Listeners tell us what's on their minds Question from TMD4817: Which is a better timeframe for maxing a 1-3 day "swing" trade with options: wkly expire vs out 1 month vs out 2-3 month Question from Patrick Rooney: Do you use futures in your strategies? For hedging perhaps? If so, which? $ES_F? $VX_F? Other? Question from OpeningBellCo: Which English soccer team do you support? $MANU or not? Question from GGLee: Buying collars means buying skew and paying up. So does it stand that the best spy trade is selling skew by selling 25 delta puts and buying 25 delta calls? Maybe add a cheap hedge with 5 or 10 delta put in case worst comes to pass? Right now I can sell the SPY Oct 25D put for $.55, buy the Oct 25D call for $.55 and then buy put hedge for about $.20 net outlay. Thoughts?

Topics this week include: Crude hitting an important psychological number Comment from Alan: I'm down for some lean hogs and livestock Hogs, hog skew (gesundheit) and going hog wild Gold, no love for the weeklies, but standard contracts are golden 15,000 Dec 2018 3000-strike calls trade; plus 7,500 each of the 2000 and 2600 strikes. Fat fingers? Doomsday prepper? Mark is rendered speechless Futures Options Feedback: What is on your mind? Question from GNDLF: Which product has the crazies skew? The juciest calls, puts, or both? Question from IML: Could the put skew in WTI potentially be due to electric car makers scrambling to hedge their primary risk? Question from Mike T.: Where do I get all this CME research? Question from NN78: If they did list Bitcoin options, how do you think the skew will look?

Topics this week include: Crude Oil Corn Gold Winners: Lean hogs, E-mini, Russell Losers: Soybean oil, rough rice, feeder cattle Futures Options Feedback: Listeners have their say Question from Friendship: You mentioned the livestock products are difficult to trade. What makes them so impenetrable? Comment from Timz: It seems like there is no reason not to collar gold if you're long. Comment from Contempts: I was on the CME Group homepage earlier, and it looks like they're starting to show the love for Bitcoin, too. The screen shot referenced is here. Question from O'Neil: Can you break down how the Fed Watch tool works?