Lead Stories

VIX ETFs Bounce on Greek Jitters as Stocks Near 2011 High
February 10th by John Spence, ETF Trends
VIX-linked exchange traded funds have been moving higher along with stocks all week, so something probably had to give.
The usual relationship between Wall Street’s “fear gauge” and stocks was back in place on Friday with the S&P 500 set for a lower open as the Greek drama drags on. In volatility ETFs, iPath S&P 500 VIX Short-Term Futures ETN (NYSEArca: VXX) rose 4% in premarket trading. It’s important to remember that volatility-linked products follow VIX futures contracts, rather than the spot price. This difference can impact long-term performance based on whether futures traders are pricing in higher or lower market volatility down the road.
http://jlne.ws/wmLnl1

S&P Indices Announces Changes to U.S. Indices
NEW YORK, Feb. 9, 2012 /PRNewswire/ — S&P Indices will make the following changes to the S&P MidCap 400 and S&P SmallCap 600 indices:
CBOE Holdings, Inc. (NASD: CBOE) will replace Temple-Inland, Inc. (NYSE: TIN) in the S&P MidCap 400 index after the close of trading on a date to be announced. S&P 500 constituent International Paper Co. (NYSE: IP) is acquiring Temple-Inland in a transaction expected to be completed soon pending final approvals.
http://jlne.ws/A4jHYc
CME Group Developing New Tool to Monitor OI
Press Release
CME Group is developing a new “Options Open Interest Profile” tool which will live on our website. The original version of the tool will focus on interest rate products. But we anticipate that subsequent versions be expanded to include other CME Group products including FX and stock indexes as well. The tool will provide users with the flexibility to focus on specific markets of choice, puts vs. calls, dates, etc.
http://jlne.ws/wbib1J

Nikkei 225 February Options Settle at 9,011.16, Traders Say
By Yoshiaki Nohara, Bloomberg – Feb 9, 2012 6:20 PM CT
Japan’s Nikkei 225 February options settled at 9,011.16, traders said.
The Nikkei 225 Stock Average fell less than 0.1 percent to 8,997.93 as of 9:09 a.m. in Tokyo. The gauge closed at 9,002.24 yesterday.
http://jlne.ws/yLZRpx

CBOE’s VIX spikes above 20 as uncertainty rises
NEW YORK (MarketWatch) — The Chicago Board Options Exchange Volatility Index VIX +10.31% on Friday spiked 10% to rise above 20 for the first time in nearly two weeks. “A 10% move, that’s a little unsettling,” said Randy Frederick, director of trading and derivatives at the Schwab Center for Financial Research.
http://jlne.ws/whTduT

U.S. Stock Options With Biggest Changes in Implied Volatility
By Bloomberg News – Feb 10, 2012
The following are the U.S. stock options that had the biggest percentage changes in implied volatility from the previous trading day as of 11:30 a.m. in New York. This {OSCH } search was limited to options that are more than 10 days from expiration, have trading volume of at least 200 contracts and have strike prices within 5 percent of the underlying security’s price.
http://jlne.ws/wuAaRD

Exchanges

NYSE Euronext boosted by IT services
By Philip Stafford in London
NYSE Euronext on Friday said growth in technology services had offset weakness in derivatives trading in the final quarter, a trend that underscored the exchange operator’s focus on IT services following its failed merger with Deutsche Börse. The group said turnover in the three months to December 31 rose 2 per cent, or $15m, to $628m. The rise was helped by a 16 per cent year-on-year increase in technology services revenues, to $127m.
http://jlne.ws/z3VvCS
NYSE Sees More Dealmaking In Standalone Strategy
–Further deals eyed as NYSE Euronext looks to grow technology, clearing
–Cost cuts, capital returns central parts of standalone path
–Potential French ‘stamp duty’ on trades eyed
By Jacob Bunge Of DOW JONES NEWSWIRES
The top executive of NYSE Euronext (NYX) said Friday further dealmaking remains on the table as the Big Board parent looks to bulk up technology and trading services in the wake of its scuttled merger with Deutsche Boerse AG (DB1.XE, DBOEF).  Efforts to build market technology into a $1 billion revenue generator by 2015 and expanded trade-processing services in Europe and the U.S. have returned to the forefront for Chief Executive Duncan Niederauer as he outlined a two-year plan that will guide NYSE Euronext’s standalone strategy.
http://jlne.ws/AluoHy

Regulation

Rep. Spencer Bachus faces insider-trading investigation
Haraz N. Ghanbari/ASSOCIATED PRESS – Rep. Spencer Bachus (R-Ala.).
By Scott Higham and Dan Keating, Published: February 9
The Office of Congressional Ethics is investigating the chairman of the House Financial Services Committee over possible violations of insider-trading laws, according to individuals familiar with the case. Rep. Spencer Bachus (R-Ala.), who holds one of the most influential positions in the House, has been a frequent trader on Capitol Hill, buying stock options while overseeing the nation’s banking and financial services industries. The Office of Congressional Ethics, an independent investigative agency, opened its probe late last year after focusing on numerous suspicious trades on Bachus’s annual financial disclosure forms, the individuals said. OCE investigators have notified Bachus that he is under investigation and that they have found probable cause to believe insider-trading violations have occurred.
http://jlne.ws/xoXJQJ

Strategy

Profit from emerging market growth with covered call options on metal ETFs
Emerging Money
Options and exchange traded funds are invaluable tools for increasing profits, furthering diversification and hedging. They’re especially useful in the metal sectors, and funds like the iPath Dow Jones-UBS Copper ( JJC , quote ), the iShares Global Materials Sector ( MXI, quote ) and the Globe X Aluminum ETF ( ALUM , quote ) have strong connections to emerging markets. China is already the world’s largest consumer of copper, iron ore and aluminum. India and Indonesia are also increasing their use of these metals. A very effective way to profit these growing appetites is to write covered call options on exchange traded funds that allow it.
http://jlne.ws/xXeffU
Hot Option Plays: Bull Call Spread Discussed
By OptionsXpress on February 10, 2012
Cusick’s Corner
I was talking about bull call spreads in the Midday and one reader asked to give at an example. Let’s say you decide to enter a bull call spread on XYZ stock trading near $26.00 by purchasing a call option two strikes below the current stock price and then selling a call with a higher strike. Example: if you buy May 22.50 strike calls for $4.20 then this call option gives you the right to buy the stock for $22.50 per share. For t
he other leg of the spread if you sell May 25 strike calls at $2.00 then this is an obligation to sell the stock for $25 per share in the event the stock rises to, or above, $25 per share. If you take the total cost of the entire spread = $4.20 paid for the 22.5 calls ($420 per contract) and subtract the credit received = $2 for the 25 calls ($200 per contract) then the Maximum Loss Potential = $2.20 per share ($220 per spread contract in real terms). Your maximum profit for this transaction is $0.30 ($30 per spread in real terms) if you hold it until expiration and the stock closes above the $25 strike price. For yield hounds, that’s about 13.6%, and we typically look to do this week or less to expiration.
http://jlne.ws/A58bmc

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