Finance

Nikola Motor Company Two truck
Source: Nikola Motor Company

Check out the companies making headlines in midday trading.
Nikola — The electric truck maker saw its stock surging 17.9% a day after the company announced on Twitter that its first customer delivery is done and signaled there’s more to come.

Novavax — Vaccine producer Novavax fell 3.3% despite reporting on Wednesday that a two-dose treatment of its Covid-19 vaccine demonstrated strong immune responses against the omicron variant. It also said the response to omicron was lower than the response against the original virus strain and added a booster dose would be helpful.
JD.com — Shares of JD.com fell about 7% after the Chinese social media company Tencent said it will distribute most of its stake in the Chinese e-commerce giant to shareholders in the form of a $16.4 billion dividend.
Las Vegas Sands, Wynn — Casino stocks with exposure to Macao rose on Thursday after the local government released the results of a review of the gaming industry. The review determined that there should be six operators, according to FactSet’s StreetAccount. Shares of Wynn rose 3.5%, while Las Vegas Sands added 4.2%. Both stocks are still trading below where they were in mid-September when Macao announced the review.
Stitch Fix — Shares of Stitch Fix gained 8% after one of its shareholders, Working Capital Advisors, disclosed that it purchased 3.4 million shares in the company, bringing its total holdings to 10.6 million shares.
Crocs — Shares of Crocs dropped more than 11.6% after the footwear maker announced it would buy privately held rival Heydude for $2.5 billion in cash and stock. The companies said they expect the deal to close in the first quarter of next year.

Tesla — Tesla shares rose more than 5% after CEO Elon Musk announced he’s “almost done” selling his shares, after offloading more than $15 billion worth for more than one month. Earlier in the week he suggested he had completed “enough” transactions to reach his goal of selling 10% of his shares.
Ortho Clinical Diagnostics, Quidel — Shares of the in-vitro diagnostics company climbed 6.9% following news that Ortho will be acquired by Quidel, a diagnostics technology provider. The cash-and-stock deal is valued at about $24.68 per share. Quidel shares tumbled by about 17%.
Sciplay, Scientific Games — SciPlay, a digital games developer and publisher, saw its shares slide 12.8% a day after Scientific Games, one of its largest shareholders, withdrew its offer to acquire the remaining 19% equity interest in the company. Meanwhile, Scientific Games shares jumped more 8.9%.
Mission Produce — The produce company’s shares tumbled 8.5% after it reported a quarterly miss on both earnings and revenue, noting that its results were affected by supply challenges.
 — CNBC’s Hannah Miao, Jesse Pound and Yun Li contributed reporting

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Check out the companies making headlines before the bell:
Novavax (NVAX) – Novavax jumped 3.4% in the premarket after the drugmaker said a two-dose treatment of its Covid-19 vaccine demonstrated strong immune responses against the omicron variant. It did add that the response to omicron was lower than that against the original virus strain and that a booster dose would likely be helpful.

Macau gaming stocks – Companies operating casinos in Macau saw their shares jump in premarket trading, following the end of a 45-day public gaming consultation. The results of that consultation apparently calmed fears about new regulations that could hurt industry profits. Las Vegas Sands (LVS) rallied 4.2%, Wynn Resorts (WYNN) added 3.4%, Melco Resorts (MLCO) jumped 5.2% and MGM Resorts (MGM) was up 1.1%.
Tesla (TSLA) – Tesla CEO Elon Musk said he was “almost done” with share sales after suggesting earlier in the week that he had completed planned sales. His latest statement made reference to the completion of prearranged sales related to the exercise of stock options. Tesla rose 1% in premarket trading.
JD.com (JD) – JD.com shares slumped 7.8% in premarket action, following news that China-based social media company Tencent would distribute most of its stake in the e-commerce firm to shareholders in the form of a $16.4 billion dividend.
Nikola (NKLA) – Nikola added 3.9% in the premarket after saying it had completed delivery of its first electric vehicle and that more were on the way.
Stitch Fix (SFIX) – Stitch Fix added 1.8% in the premarket after shareholder Working Capital Advisors disclosed the purchase of 3.4 million shares in the online clothing styling company, bringing its total holdings to 10.6 million shares.

Mission Produce (AVO) – The provider of fresh produce to retail and wholesale customers fell 6 cents short of estimates with a quarterly profit of 24 cents per share, while revenue also fell short of forecasts. The company said supply challenges impacted its results, and the stock tumbled 9% in premarket trading.
Crocs (CROX) – The casual footwear company announced a deal to buy privately held rival Heydude for $2.5 billion in cash and stock. The two sides expect the transaction to close during the first quarter of 2022. Crocs fell 3.4% in the premarket.
Ortho Clinical Diagnostics (OCDX) – The in vitro diagnostics company will be acquired by diagnostics technology provider Quidel (QDEL) in a $6 billion cash-and-stock deal valued at $24.68 per share. Ortho stock surged 16.1% in premarket trading while Quidel tumbled 7.2%.
SciPlay (SCPL) – The digital game developer’s stock plummeted 18.2% in the premarket after it ended talks to sell itself to majority shareholder Scientific Games (SGMS). Scientific Games shares surged 7.9%.

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The crypto industry now sprawls well beyond bitcoin and executives expect new uses for the technology to pick up in 2022.
New blockchain-based apps, “Web3” and regulation are top of executives’ minds heading into next year.
The biggest threat? “Incoherent and inconsistent, hastily formed regulations and policy,” Circle CEO Jeremy Allaire says.

Sam Bankman-Fried, CEO of cryptocurrency exchange FTX, at the Bitcoin 2021 conference in Miami, Florida, on June 5, 2021.
Eva Marie Uzcategui | Bloomberg | Getty Images

Cryptocurrencies have had yet another wild year.
Bitcoin, the world’s largest digital asset, has seen a roughly 65% gain since January — with some ten to twenty percent swings in between. It brought in a crop of new, individual investors along the way as payment giants like PayPal started letting users trade crypto. More billionaires and institutional investors dove in to help legitimize the asset class.

The industry now sprawls well beyond bitcoin. NFTs, blockchain-based videogames and “Web3” are top of executives’ minds heading into next year. Regulation remains as the biggest uncertainty.
Here’s a look at what some of the industry’s most influential executives had to say.

FTX CEO, Sam Bankman-Fried

The 29-year-old founder and CEO told CNBC he doesn’t expect legislative action to be the immediate answer for “regulatory clarity.” Especially since it’s “pretty hard right now to get things through Congress.”
It’s just as likely to be cobbled together from a series of statements, enforcement actions, and “other indications” to set the guardrails,” Bankman-Fried said.
The CEO is still bullish on Solana as an alternative to Ethereum. But it’s possible that a new blockchain pops up as the “Holy Grail” that would eventually be able to host a million transactions per second. Right now, he said there are “very few even trying to get that point.”

“There will be substantial fleshing out of the crypto regulatory systems over the next few years.”
“Most banks have effectively decided internally that they will be entering the crypto ecosystem. But how and when they do it is going to depend a lot on the details of regulatory structure.”
“There’s enormous worry about stablecoins right now. But it’s pretty straightforward to address. You have attestations, or you have an audit from a regulator.”
“The thing that people are worried about with stablecoins is are they stable? If you can address that, you’ve addressed most of the worries about it from a customer protection and a systemic risk perspective. It’s not that hard to do. So I’m cautiously optimistic that that’s where we’re going.”

Circle CEO, Jeremy Allaire

Jeremy Allaire, Co-Founder and CEO, Circle 
David A. Grogan | CNBC

The CEO of Circle is calling for more use of dollar-pegged cryptocurrencies, or stablecoins, by e-commerce firms, consumers and financial institutions. Circle, which is set to go public via SPAC, operates its own stablecoin called USDC.
Allaire expects to see more institutional adoption and celebrity trendsetters lending their brands to crypto through NFTs. DAOs, which rely on crowdfunding, may even “challenge venture capital investors on some of the largest and hottest deals in crypto,” he said.
The biggest threat? “Incoherent and inconsistent, hastily formed regulations and policy,” Allaire said.

“Even in an environment where the Fed raises interest rates, investors and businesses will be hungry for the high-yield opportunities offered through digital assets. So expect to see institutional adoption of digital assets balloon — directly, through ETFs, or custom yield-generating products.”

“There is bipartisan recognition that blockchain and crypto technologies represent a U.S. competitive advantage, especially if properly regulated, so new legislation and laws will come quicker than many people expect.”
“In 2022 stablecoin adoption will continue its upward trajectory. We believe that dollars on the internet will soon be as efficient and widely available as text messages and email.”

Bitfury CEO & former head of the OCC, Brian Brooks

Brian Brooks, chief executive officer of Bitfury Group Ltd., speaks during a House Financial Services Committee hearing in Washington, D.C., on Wednesday, Dec. 8, 2021.
Stefani Reynolds | Bloomberg | Getty Images

Brian Brooks, the former Acting Comptroller of the Currency, said there’s now consensus among lawmakers in Washington that crypto is here to stay. He expects more blockbuster funding rounds after a record 2021, continued mainstream understanding of the crypto space.
For example, not all “crypto” are currencies, or meant to act like currencies, he said.

“Retail adoption is there and will continue to accelerate, but for those established Wall Street firms and other financial services companies that are not already involved in the crypto ecosystem, it is a matter of “when” not “if”.
“The need for clear regulatory action that creates a sustainable framework to allow crypto and Web 3 to grow in the United States will reach its tipping point.”
“The level of activity and innovation occurring in the space is too great to ignore, as is the risk to American competitiveness in technology and capital markets.”

Paxos CEO, Charles Cascarilla

Chad Cascarilla, CEO of Paxos.
Adam Jeffery | CNBC

Paxos is the company powering PayPal’s crypto offering behind the scenes. CEO Charles Cascarilla also expects more action in the stablecoin market. His company offers its own dollar-pegged coin, USDP. The CEO is one of many warning that the U.S. has a lot to lose if it gets regulation wrong.

“Big tech and finance players like Venmo, Interactive Brokers and Mercado Libre entered crypto in 2021. There will be even more and bigger players joining the onslaught next year.” 
“2022 is the year of the stablecoin. Consumer wallets enabled stablecoins for the first time this year. Money is a product and it needs to be updated for how people live today. Regulated stablecoins like USDP are the answer.”
“Regulatory clarity, consistency and certainty will foster Safe blockchain innovation in the US. This technology presents many opportunities for American market primacy in the long-term if we get this right, and there are many risks if we get it wrong.”

Grayscale Investments CEO, Michael Sonnenshein

This year marked an industry milestone of the first futures-based bitcoin ETF. But Grayscale and others in the industry are looking to take that a step further.
It’s looking to convert the world’s largest bitcoin trust, GBTC, into an ETF and CEO Michael Sonnenshein is optimistic for an approval in 2022. He’s also seeing investor interest beyond bitcoin, and “tension” between Big Tech and start-ups.

 “We’re entering into 2022 Without a Bitcoin ETF, but believe that in the coming year the SEC and other regulators will continue to dig in on this issue. We remain optimistic that they will allow for an even playing field — and give investors the optionality between both spot and futures-based ETF products for getting exposure.”
“This was certainly a year when we thought people were diversifying beyond Bitcoin and Ether. We’re starting to see that investors are going to specific protocols and projects, and an increasing mindshare among investors that the universe of crypto assets is only broadening.”
“There will be an expanded conversation around the tension between some of these centralized platforms that are today managed by social media and e-commerce, giants, and established tech companies versus some of these up and coming decentralized platforms.”

Robinhood Crypto Lead and COO, Christine Brown

Robinhood started as a stock-trading start-up. But in its second quarter as a public company, it got more than half of total revenue from crypto trades. Of that, more than 60% came from Dogecoin transactions. As the asset class becomes more important to the company’s bottom line, executives have said they’re moving slowly on adding new assets to the platform, until there’s more regulatory clarity.

“2021 was the year crypto went mainstream.”
“Whether through NFTs or their token of choice, more people engaged in crypto in what was a breakout year.”
“Crypto has long had a HODL mentality, and that extended to NFTs in 2021 where JPGs replaced photos all across social media. The infrastructure investment from 2017 is ready for primetime, with multiple layer L1s and L2 platforms flourishing in 2021. With more crypto enthusiasts to cater to, 2022 will see companies focus more on design and user experience to ease that transition from web 2 to web 3, and we’ll continue to see major brands continuing to get involved.”

Anthony Pompliano, head of Pomp Investments

If you’ve ever perused crypto Twitter, you probably know “Pomp.” With more than 1 million followers, the investor is known for his bullish calls on bitcoin and said the asset has transitioned from a contrarian idea, to a “consensus idea on Wall Street in 2021.” He expects more adoption next year from legacy companies buying bitcoin for their balance sheets, and eventually building dedicated business units.
Pompliano also highlighted moves in the bitcoin mining industry after China made the activity illegal, bitcoin’s potential for global payments, and a “brain drain” underway from Big Tech and Wall Street.

“Bitcoin mining transitioned from a largely international activity to a US-centric activity in 2021. It would not surprise me to see new all-time highs in the bitcoin hash rate in 2022, along with continued market share growth for the US as a whole, along with Texas as a single state.”
“We saw a major social media platform, Twitter, embrace the Lightning Network for payments in 2021 via Strike’s API (I’m an investor). We also saw a nation state, El Salvador, embrace the Lightning Network for payments. We should expect multiple large Fortune 500 companies to embrace the Lightning Network in 2022 for payments.”
“The brain drain from legacy technology and finance industry will continue. Young people, and increasingly the most skilled people, want to focus their talents on the industry where they can have the greatest impact. Crypto has been growing at an incredible rate, both in terms of new jobs, new companies, funding, economic value created, etc. This transition has only begun and will likely accelerate in 2022.”

Michelle Bond, CEO of Association for Digital Asset Markets

While this was a busy year for the crypto trade association in DC, “2022 is going to be way busier,” Bond said. She also expects the SEC to come out with more enforcement actions.

“The Biden administration has been in office for a year. We’re now presented with a window where something can get done on a bipartisan basis. And that will advance the industry and it will provide guardrails for market integrity and consumer protection.”
“While final legislation may not actually take place, take effect in 2022. I think the direction of travel is going to be clear, and what we’re doing in 2022 is setting the stage for 2023, 2024 and beyond.”
“The balance is going to be one finding a policy framework in which the industry can flourish and the U.S. can benefit where consumers can also be protected.”

Gemini COO, Noah Perlman

The crypto exchange, founded by Tyler and Cameron Winklevoss, climbed to a $7 billion valuation this year and is among the dozens with a bitcoin ETF application in the works. Its COO, Noah Perlman, sees crypto payments going mainstream, more non-tech companies embracing the Metaverse, and more women jumping into a male-dominated market.

“More retail companies with household names will expand their crypto offerings, further legitimizing digital currencies as a form of payment and as an asset. Credit card companies such as Mastercard and Visa that offer crypto rewards will become more prevalent, which will make investing in digital assets as easy as swiping your card at a store.”
“It’s no surprise to see tech giants Apple, Meta, Snap, Alphabet, and Microsoft build out their Metatverse ecosystem, but we expect this trend will target other industries as we’ve seen with Nike’s acquisition of RTFKT and Adidas launching an NFT collection called “Into the Metaverse”.
“The profile of the typical crypto investor will change significantly in 2022. Previously, the typical crypto investor was a man in his 30s making more than $100,000 per year. We already saw some significant demographic shifts in the past year. According to Gemini’s 2021 State of the US Crypto Report, 63 percent of U.S. adults are crypto-curious, meaning they don’t yet own crypto but report interest in learning more or holding digital assets soon.”
“We’ll see an approval for a spot bitcoin ETF most likely in H1.”

John Wu, President of Ava Labs

Ethereum has had a break-out year but new, alternative blockchains are popping up as platforms to build NFTs and other apps. Avalanche is among the new challengers to Ethereum. The president of Ava Labs, a former hedge fund trader, predicts a shake out of “speculative” assets, and a “brain drain” as software developers leave Big Tech in search of next wave of computing. He also expects bitcoin’s market dominance to keep declining.

“We will continue to see inflows into smart contract platforms, DeFi, Gaming andmetaverse. The winners will be the ones with strong growth of users, use cases and transaction activity. Speculative assets with no network effects will be the losers.”
“BTC still has strong interest from both institutional and retail investors. Let’s not forget that it has had a 10 year lead time compared to other platforms so it still has the biggest brand name out there. On the other hand, it’s dominance over the crypto market is declining and will continue to do so.”
“While these smart contracts platforms do compete with each other for developers, the real competition is with traditional web 2.0 companies like Google and Facebook. We are seeing tremendous interest from web 2.0 developers who want to now build on decentralized systems because they find web 3.0 to be a lot more creative and exciting.”

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JD.com plummeted Thursday after Tencent announced it will be giving most of its shares in the Chinese e-commerce giant away to its shareholders.
Blue Lotus Capital Advisors’ Shawn Yang said Tencent’s move may have stemmed from a desire to deflect attention away from itself rather than JD’s fundamentals.
Beijing has been cracking down on China’s domestic tech sector for months, citing concerns over potential monopolies and data security, slapping massive fines on companies like Alibaba and Meituan.

JD.com plummeted Thursday after Tencent announced it will be giving most of its shares in the Chinese e-commerce giant away to its shareholders.
Tencent said it will declare a one-time dividend in which it will distribute more than 457 million Class A ordinary shares of JD.com to shareholders, with a total value of approximately 127.7 billion Hong Kong dollars (about $16.37 billion).

Tencent has investments in several companies, including other large Chinese internet companies like Meituan and Pinduoduo. While those investments have helped fuel growth, Blue Lotus Capital Advisors’ Shawn Yang said they could also raise concerns about Tencent’s size and influence.
“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,'” Yang said. “That probably can reduce some of the concerns of its size and influence.”
Beijing has been cracking down on China’s domestic tech sector for months, citing concerns over potential monopolies and data security, slapping massive fines on companies like Alibaba and Meituan.

Yang said Tencent’s move may have stemmed from a desire to deflect attention away from itself rather than JD’s fundamentals. He explained JD’s e-commerce business has been “very resilient” this year compared with competitors Pinduoduo and Alibaba.
In its Thursday filing, Tencent said part of its strategy includes investing in companies early to support development and to exit when they become “consistently capable of self-financing their future initiatives.” Tencent said JD.com has reached that stage and that now is an “appropriate time” to distribute its stake among its shareholders.

JD.com said in a separate release that Tencent’s stake would fall from about 17% currently to around 2.3% after the move. It also said the two companies will continue to maintain their strategic partnership agreement.
Shares of JD.com in Hong Kong closed 7.02% lower. Tencent shares, on the other hand, surged 4.24%, bucking the overall trend among Chinese tech stocks listed in the city. The Hang Seng Tech index slipped 0.83% to 5,638.31.

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Investors reacted to a study out of South Africa suggesting a reduced risk of hospitalization and severe disease with omicron compared to delta.
The U.S. Centers for Disease Control and Prevention authorized an antiviral Covid pill from Pfizer for people aged 12 and above at risk of severe illness.

LONDON — European stocks traded slightly higher Thursday morning as traders looked to signs that the omicron coronavirus variant is not as severe as previously feared.

The pan-European Stoxx 600 index opened up 0.2%, with travel and leisure shares climbing 1.7% to lead the gains amid optimism over Covid.

Airline stocks were among the top performers, with British Airways parent company IAG and Hungarian budget carrier Wizz Air both up about 3%.
Investors reacted to a study out of South Africa — where the omicron strain was first discovered — suggesting a reduced risk of hospitalization and severe disease compared to delta.
The study, which is not yet peer reviewed, found people diagnosed with omicron in South Africa from Oct. 1 to Nov. 3 were 80% less likely to be hospitalized than if they caught another variant in the same period.
Experts say it is still too early to know for sure the severity of omicron, but the study offers hope that both the human and economic cost of the strain will not be as severe as initially feared. Omicron’s rapid spread has led governments around the world to reimplement some Covid restrictions in a bid to contain it.
More good news arrived Wednesday as the U.S. Centers for Disease Control and Prevention authorized an antiviral Covid pill from Pfizer for people aged 12 and above at risk of severe illness.

These glimmers of hope have boosted global share markets. In Asia, stocks rose Thursday and stateside, stock futures were trading slightly higher.
Investors also digested data showing that U.S. consumer confidence ticked up in December, despite fears over omicron.
Back in Europe, Italian Prime Minister Mario Draghi on Wednesday suggested he would be willing to become the country’s president, saying his government had laid the foundations for key work to continue.
In corporate news, Ryanair on Wednesday said it was more than doubling its forecast for full-year losses, citing the emergence of travel restrictions in several big markets due to the coronavirus. Ryanair
Looking at individual stocks, Germany’s United Internet sunk toward the bottom of the Stoxx 600 Thursday, down 1.6% after news that CEO Ralph Dommermuth has increased his equity ownership of the firm to 50.1% but won’t make a voluntary acquisition offer to shareholders.

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Stock futures were slightly higher Wednesday evening following the second trading day in which equities climbed higher, as investors looked past earlier jitters about the spread of the omicron Covid variant.
Futures contracts tied to the Dow Jones Industrial Average added 0.06%. S&P 500 futures rose 0.1% and Nasdaq 100 futures gained 0.06%.

In regular trading, the Dow gained 0.7%, bringing its two-day rally to more than 800 points. The S&P 500 climbed 1% to 4,696.56 and now sits 1% away from its record. The Nasdaq Composite climbed 1.2%. All three averages are on track to end the week higher.
The rebound, which began Tuesday, follows a three-day losing streak for the major averages spurred by fears about the speed of the spread of the latest Covid-19 variant. It was the worst decline for the S&P over a three-day period since September. For the Nasdaq, it was the worst three-day stretch since May.
“December is a month where we’re not supposed to see much volatility, but we have thanks to the omicron variant news,” said Angelo Kourkafas, an investment strategist at Edward Jones. “The last two days we have seen a very strong rebound, and now we are actually within breathing distance of record highs. In our view this two-day rally reflects confidence that the economy will be able to successfully navigate the threat from the omicron variant.”
Still, trading was relatively thin and is expected to continue to be so heading into the Christmas holiday.
Consumer discretionary and tech stocks were among the biggest gainers on the day Wednesday. Tesla shares jumped 7% after CEO Elon Musk said he’s reached his goal of selling 10% of his shares for tax reasons.

On Wednesday the Food and Drug Administration granted emergency use authorization for Pfizer’s Covid pill, the first oral antiviral drug against the virus. The drugmaker’s shares gained about 1%.
Investors will get some key inflation data on Thursday, including prices for core personal consumption expenditures. Consumer sentiment numbers and jobless claims will also be released.
— CNBC’s Jesse Pound contributed reporting.

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A Tesla store in Beijing, China, on July 4, 2021.
Costfoto | Barcroft Media | Getty Images

Check out the companies making headlines in midday trading.
CarMax — CarMax shares fell 6.4% despite the used car retailer’s better-than-expected quarterly report. The company posted earnings of $1.63 per share, 19 cents above the Refinitiv consensus estimate and revenue came in at $8.53 billion, $1 billion higher than expected.

Tesla — Tesla shares rallied 7.5% after CEO Elon Musk said he sold “enough stock” to reach his goal of offloading 10% of his shares. On Tuesday, Musk sold another 583,611 shares, bringing the total number of shares he has offloaded to 13.5 million.
BlackBerry — BlackBerry shares dropped 1.7% even after the company posted quarterly results on Tuesday that beat Wall Street expectations. The communications software maker posted a breakeven quarter on an adjusted basis, while analysts expected a loss of 7 cents per share, according to StreetAccount. However, current quarter forecasts for cybersecurity products fell shy of the StreetAccount consensus estimate.
Caterpillar — Shares of the industrial giant gained 1.9% after Bernstein upgraded the company to an outperform rating. The firm said expectations are low for Caterpillar despite plenty of upside heading into 2022. “Although the slope of its secular growth trajectory remains an outstanding question, the cycle is calling CAT’s name and the path is clearing for the stock to outperform over these next 12 months,” the firm said. 
Alibaba — Alibaba shares fell 4.2% after Atlantic Equities downgraded the Chinese e-commerce company’s stock to a neutral rating from overweight. The firm was concerned Alibaba’s shopping platforms will not improve performances in the near term.
Darden Restaurants — Darden Restaurants saw its shares rally 1.6% after it received an upgrade to a buy rating from hold from Stifel. The firm liked the Olive Garden-parent’s upbeat quarterly results last week.

Williams-Sonoma — Shares of the home goods store rose 2.4% after Loop Capital Markets upgraded Williams-Sonoma to buy from hold. Loop said in a note to clients that the company could benefit from the return of people staying away from homes and offices.
Coinbase — Shares of the crypto services firm added 2.8% after Oppenheimer named the company a top pick for 2022, betting that adoption of digital assets by investors will continue and provide attractive returns for long-term investors. The move also comes as the bitcoin price climbs higher. The two tend to trade in tandem because of Coinbase’s reliance on trading fees.
Paychex — Paychex shares rose 5.5% after the payroll services company reported strong quarterly earnings. The company posted a profit of 91 cents per share on revenue of $1.11 billion. Analysts surveyed by StreetAccount expected earnings of 80 cents per share on revenue of $1.06 billion.
— CNBC’s Jesse Pound, Pippa Stevens and Tanaya Macheel contributed reporting

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A record of 39 million options contracts have traded daily on average this year, rising 35% from 2020. Retail investors now account for more than 25% of this trading activity.
However, the majority of these small-time traders are buying the most basic call and put options, which have a much lower probability of profit compared with advanced strategies like options spreads.
“Everybody in the business knows that if you’re only buying out-the-money calls, then you’re likely going to lose money over time,” said John Foley, CEO of Options AI.

People wait in line for t-shirts at a pop-up kiosk for the online brokerage Robinhood along Wall Street after the company went public with an IPO earlier in the day on July 29, 2021 in New York City.
Spencer Platt | Getty Images News | Getty Images

Stock options have gained popularity on Main Street this year as a growing number of retail investors started executing high-speed derivatives trades, but most of them are playing a losing game given the lack of access to more complex strategies.
A record of 39 million options contracts have traded daily on average this year, rising 35% from 2020, according to Options Clearing Corp. Retail investors account for more than 25% of total options trading activity, due to easy access via commission-free online brokers, according to data from Alphacution Research Conservatory.

A staggering majority of these small-time traders are buying the most basic call and put options, which have a much lower probability of profit compared with advanced strategies that may not be easy for investors to grasp, such as options spreads.
For example, 11% of Robinhood’s monthly active users made an options trade in the first three quarters of 2021. Meanwhile, fewer than 1% executed a multi-leg options trade, which involves two or more transactions at the same time.
“Everybody in the business knows that if you’re only buying out-the-money calls, then you’re likely going to lose money over time,” said John Foley, CEO of Options AI. “The question of democratization shouldn’t be ‘can I trade options?’ but ‘can I have straightforward access to the options strategies that Wall Street uses?’ The playing field is not level right now and no one is really focusing on that.”
Options are a form of derivatives contract that gives buyers the right to buy or sell a security at a chosen price at some point in the future. A multi-leg options spread trade involves buying and selling options of the same underlying security simultaneously, a common way to hedge risk. These multi-leg strategies may be slightly cheaper because the proceeds the investor makes from selling the option offsets some of the purchase cost.
Here’s an example of different trades using Tesla options based on real-time prices midday Tuesday. In this case, a typical retail investor is paying more for bets with a lower chance of profit when a cheaper option spread with a higher win probability exists.

Most popular brokers have between three and five tiers for options trading that they grant investors access to based on their trading experience, income and risk profile. For instance, options spreads — which involve using multiple options to hedge risk — are not available to most investors until they graduate to level 3. So, essentially, new traders have to learn options by trial and error at first before they can use strategies that Wall Street pros have profited from for decades.
“The Robinhood investor is the most novice of the cohorts of retail investors,” said Paul Rowady, director of research for Alphacution Research Conservatory. “The question is how do I influence new, often very young first-time investors using an application that’s frictionless and highly gamified? How do I get them to try options where based on the payment for order flows, these fees are a very lucrative component of their revenue model.”
Robinhood generated $164 million from options trading in the third quarter, more than tripling its transaction-based revenue from equities trading. The brokerage had 22.4 million net cumulative accounts as of the third quarter, down from 22.5 million in the second quarter.
“Of course, we know options aren’t for everyone, and unlike some other brokerages, Robinhood does not allow short selling or uncovered options trading,” a spokesperson for the popular trading app said. “Over the past year and a half, we’ve enhanced our options eligibility criteria, added more educational content on options both on our Learn website and directly in the app, improved our options displays, and introduced 24/7 live phone support through the app.”

1 million trades per day

The surge in retail options trading activity is most prominent in the so-called meme stocks. Earlier this year, a legion of retail traders glued to online chatrooms managed to create massive short squeezes in names like GameStop and AMC Entertainment by piling into these shares and call options.

The Cboe analyzed all customer volume in the top 15 meme stocks on its four options exchanges by the original order size. 
In January 2021 at the height of the meme stock mania, options trades with an order size between 1 and 10 reached more than 1 million trades per day in the top 15 meme stocks, and that count continues to climb into the end of 2021. One option contract represents 100 shares of the underlying security.
Retail investors’ increased engagement in options trading has garnered the attention from regulators.
The Financial Industry Regulatory Authority will publish a request for comment in the coming weeks, seeking insight from exchanges and brokers about options trading and the risks involved, a spokesperson told CNBC.
Finra said it’s considering whether changes to the options rules may be warranted, including rules around options account approvals, supervision and margin requirements.
— CNBC’s Nate Rattner contributed to this story.

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