Lead Stories

Knight Capital becomes hot options play after trading problems
Angela Moon, CNBC
As Knight Capital Group shares plunged quickly following trading problems that roiled the market on Wednesday, the options market got busy, scrambling for bets that expect further decline in the stock.
Erroneous trades on the New York Stock Exchange at the open sharply raised volatility in dozens of stocks, even triggering halts for several issues – Corelogic Inc , China Cord Blood Corp , Kronos Worldwide , Trinity Industries and Molycorp .
http://jlne.ws/MRUbB9

Nasdaq Options Decidedly Bearish After UBS Report
Kaitlyn Kiernan, The Wall Street Journal
Bearish activity in Nasdaq OMX options surges after UBS announced plans for legal action against the exchange operator to recoup $356M in losses from the botched Facebook initial public offering.
http://jlne.ws/MRTx6K

Options Traders Gird for End of Facebook Lockups
Kaitlyn Kiernan, The Wall Street Journal
Options traders are betting Facebook Inc.’s shares will face new headwinds as investor-lockup periods end in the coming weeks.
That would continue a trend established earlier this year when peers Groupon Inc. and Zynga Inc.  faced similar circumstances—the expiration of rules that temporarily barred early investors from selling more shares into the market.
http://jlne.ws/R9xSrm

Deutsche Bank Says Facing Lawsuit Over Yen Libor, Derivatives
Nicholas Comfort and Annette Weisbach, Bloomberg/Businessweek
Deutsche Bank AG (DBK), one of at least a dozen banks being probed over allegations of interest-rate rigging, is being sued over claims it manipulated the Yen Libor rate and the price of derivatives tied to the Euroyen benchmark.
http://jlne.ws/MRU5JL

Fidessa appoints new president for North American buyside
Automated Trader
Fidessa has announced the promotion of Megan McKeever Costello to President. In her new role, Ms. Costello will drive and manage the growth and development of Fidessa’s buy-side business. She reports to Paul Nokes, Fidessa’s Global Buy-side CEO.
http://jlne.ws/PuhFHp

OptionMonster Daily Volatility Report with Russell Rhoads of the Options Institute:

OptionMonster Cash Money Zone with Eric Wilkinson:

Exchanges

TMX Deal Puts Canada Finance Firms in Charge of Exchange
Doug Alexander, Bloomberg/Businessweek
Some of Canada’s biggest financial institutions are poised to own the country’s main stock exchanges, derivatives bourse and securities clearing house after sealing a C$3.73 billion ($3.72 billion) takeover of the Toronto Stock Exchange owner.
Maple Group Acquisition Corp., whose 12 members include Toronto-Dominion Bank (TD), Canada Pension Plan Investment Board and Manulife Financial Corp. (MFC), acquired 91 percent of TMX Group Inc. (X) shares from investors yesterday for C$50 each in a cash-and- stock offer.
http://jlne.ws/MRUsUK

CBOE Holdings, Inc. Board Increases Quarterly Dividend; Extends Share Repurchase Program
Press Release
CBOE Holdings, Inc. CBOE -0.35% today announced that its Board of Directors approved a 25-percent increase to its quarterly cash dividend to $0.15 per share from $0.12 per share and authorized the company to repurchase an additional $100 million of its outstanding unrestricted common stock.
The share repurchase authorization is in addition to any unused amount remaining under the existing $100 million share repurchase authorized in August 2011. As of July 31, 2012, there was approximately $3.3 million remaining under the prior authorization, and the company had approximately 87.3 million shares of unrestricted common stock outstanding.
http://jlne.ws/MRUk7O

ISE Reports Business Activity for July 2012
Press Release
–  ISE was the second largest equity options exchange in July with market share of 17.8%, excluding dividend trades.
–  Dividend trades made up 5.2% of industry volume in July 2012.  
The International Securities Exchange (ISE) today reported average daily volume of 2.3 million contracts in July 2012. This represents a decrease of 20.0% compared to July 2011. Total options volume for the month was 48.1 million contracts. ISE was the second largest U.S. equity options exchange in July with market share of 17.8%*.
http://jlne.ws/MRT4BG

OCC Announces Cleared Contract Volume Declined 12% in July While Securities Lending Volume Rose 19%
Press Release
OCC announced that cleared contract volume reached 309,599,417 contracts in July, representing a 12 percent decrease from the July 2011 volume of 351,117,113 contracts. OCC’s year-to-date total contract volume is down 7 percent with 2,410,587,457 contracts in 2012.
Options: Exchange-listed options trading volume reached 306,817,994 contracts in July, a 12 percent decrease from July 2011. Average daily options trading volume in July was 14,610,380 contracts, 16 percent lower than the 17,410,909 contracts in July of last year. Year-to-date options trading volume is down 7 percent from 2011 with 2,390,920,900 contracts.
http://jlne.ws/MRUgVz

Regulation

Clearing houses told to get “living wills” ready
Huw Jones, Reuters
Clearing houses must plan for an orderly rescue and even their own demise to prevent their growing importance in the financial system from becoming a source of market disruption when things go wrong, global regulators said on Tuesday.
http://jlne.ws/MRTWX0

Strategy

Getting a Piece of the Central-Bank Action
Steven M. Sears, Barron’s
The verdict is still out on what steps the Federal Reserve and the European Central Bank will take in the next two days to stimulate Western economies.
Some market pundits argue that forceful central-bank action is in the cards, while others aren’t so sure. 
To wager on either outcome, look no further than the Select Sector Financial SPDR.
http://jlne.ws/Pul09s

So You Want To Trade Volatility: Don’t Get Angry That Your Boat Can’t Fly
Josh Krause, Seeking Alpha
One of the first things that anyone paying attention to VIX and its related products notices is the discrepancy that you see in daily movements. Depending on the market environment it is not unheard of to see spot VIX green for the day but VXX, UVXY and TVIX red for the day. While confusing to many, this is not a reason to get upset with the performance of your volatility product.
http://jlne.ws/MRTqYV

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