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☆ These ETFs promise investors downside protection — at a cost
▼ + stars: | 2024-05-08 | by ( Michelle Fox | ) www.cnbc.com time to read: +7 min

Investors looking for protection against market downside are turning toward buffer exchange-traded funds, also known as defined-outcome ETFs. Buffer ETFs have exploded in popularity in recent years, although they are still a small slice over the overall industry. How buffer ETFs work Managers use a set of equity options when building a fund. Recently, Calamos announced a new product line of 12 ETFs that offers 100% downside protection. The first in the line, Calamos S & P 500 Structured Alt Protection ETF (CPSM) , began trading May 1.

Persons: Lan Anh Tran, Morningstar, Tran, Todd Sohn, Strategas, Sohn, Calamos, Russell, Matt Kaufman, Kaufman, Morningstar's Tran, HELO 1Y, It's Organizations: Morningstar, Strategas Securities, Capital Management, Equity, PGIM, Allianz, BlackRock, Treasury, Trust, JPMorgan Hedged Equity, JPMorgan Locations: BlackRock

Excluding volatile food and energy components, the core PCE price index rose 0.1% in August month-on-month, compared with estimates of 0.2% advance. Consumer discretionary led gains among the major S&P 500 sectors, rising 0.9%. But the sector is set to emerge as the only major S&P 500 sector to notch monthly gains. The S&P 500 and the Nasdaq are poised for their worst monthly showing of the year amid uncertainty around interest rates. The S&P index recorded one new 52-week high and five new lows, while the Nasdaq recorded 25 new highs and 109 new lows.

Persons: Brendan McDermid, ”, David Russell, “ It’s Organizations: Reuters, Nasdaq, New York Stock Exchange, REUTERS, Commerce Department, Apple, Microsoft, Nvidia, University of Michigan Consumer, Energy, Dow Jones, Dow, Democratic, Traders, JPMorgan Hedged Equity, Nike, Dick’s, Goods, NYSE Locations: New York City, U.S

FILE PHOTO:Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 28, 2023. Excluding volatile food and energy components, the core PCE price index rose 0.1% in August month-on-month, compared with estimates of 0.2% advance. The S&P 500 and the Nasdaq are poised for their worst monthly showing of the year amid uncertainty around interest rates. Riding the current of higher crude prices, energy is set to emerge as the only major S&P 500 sector to notch monthly gains. The S&P index recorded no new 52-week high and two new lows, while the Nasdaq recorded 21 new highs and 60 new lows.

Persons: Brendan McDermid, ”, Kim Forrest, “ Organizations: Reuters, New York Stock Exchange, REUTERS, Commerce Department, Bokeh Capital Partners, Apple, Microsoft, Nvidia, University of Michigan Consumer, Dow Jones, Nasdaq, Energy, Dow, Democratic, Traders, JPMorgan Hedged Equity, Nike, Dick’s, Goods, NYSE Locations: New York City, U.S, Riding

☆ Traders wary of volatility as JP Morgan fund's big options trade looms
▼ + stars: | 2023-09-28 | by ( Saqib Iqbal Ahmed | ) www.reuters.com time to read: +3 min

The fund's sheer size means its options reset can rack up a massive surge in trading volume in S&P 500 options and set off related hedging activity that can aggravate market moves. How the fund's rebalancing could end up affecting the whole market has to do with market makers - typically big financial institutions that facilitate trading but seek to remain market-neutral. As things stand, with the S&P 500 trading around the 4,290 level, market makers are short about 40,000 September 29 S&P 500 options at the 4,210 strike. Market makers who have sold these put options must sell stock futures to minimize their own risk, as the market drifts closer to the strike price of the sold options. "As we move lower, market makers need to sell and as we move higher market makers need to buy it back," Murphy said.

Persons: Brendan McDermid, Morgan, Chris Murphy, Murphy, Brent Kochuba, Saqib Iqbal Ahmed, Megan Davies, Nick Zieminski Organizations: New York Stock Exchange, REUTERS, JPMorgan Hedged Equity, Apple Inc, Microsoft Corp, Amazon.com Inc, Treasury, Susquehanna Financial Group, Traders, Thomson Locations: New York City, U.S

☆ Investors watch for quarter-end rebalancing in US stocks, bonds and options
▼ + stars: | 2023-06-26 | by ( Saqib Iqbal Ahmed | ) www.reuters.com time to read: +2 min

NEW YORK, June 26 (Reuters) - Investors are watching a large hedged-equity fund's quarterly refresh of its options positions and quarter-end rebalancing by portfolio managers to potentially influence U.S. stock moves as the first half of the year winds down this week. The nearly $16 billion JPMorgan Hedged Equity Fund , which holds a basket of S&P 500 (.SPX) stocks along with options on the benchmark index, is expected to roll its options positions on Friday. While the trade is anticipated by many market participants, it can exacerbate or suppress daily stock market moves, especially during times of poor market liquidity, analysts said. For now, the trade may be helping suppress volatility in stocks. That may help curb market volatility, analysts said.

Persons: Brent Kochuba, Michael Purves, Saqib Iqbal Ahmed, Ira Iosebashvili, Matthew Lewis Organizations: YORK, JPMorgan Hedged Equity Fund, Bloomberg, JPMorgan, Tallbacken Capital Advisors, Thomson Locations: U.S, New York

☆ Explainer: How a massive options trade by a JP Morgan fund can move markets
▼ + stars: | 2023-03-30 | by ( Saqib Iqbal Ahmed | ) www.reuters.com time to read: +3 min

read moreWHAT IS THE JP MORGAN HEDGED EQUITY FUND? The JPMorgan Hedged Equity Fund holds a basket of S&P 500 (.SPX) stocks along with options on the benchmark index and resets hedges once a quarter. For the year, the fund was down 10.66% through September 28, compared with a 21% decline for the S&P 500 Total return Index (.SPXTR). On June 30, the refresh of the fund's options positions involved about 140,000 S&P 500 options contracts in all, including S&P 500 puts at strikes 3580 and 3020 and calls at 4005, all for the September 30 expiry. Options dealers - typically big financial institutions that facilitate trading but seek to remain market-neutral - take the other side of the fund's options trades.

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