JLN Options: Apple investors pay more for downside bets

Mar 22, 2013

Lead Stories

Apple investors pay more for downside bets
Doris Frankel, Reuters
The steady slide in longtime market darling Apple Inc has brought in options investors willing to pay more for bearish bets than at any time in the last four years.

The Supreme Myth of the Risk of Options Debunked
John Critchley, The Options Insider
I was recently talking to a very well educated corporate lawyer who is the father of my daughter’s basketball teammate and the conversation turned to investments.  I told him what I did and that my passion was options.  The reaction “Oh My, Options they are too risky for me.”  I cringed and said   “No!! No!! Let me tell you the facts.”

Masked by Gibberish, the Risks Run Amok
Floyd Norris, The New York Times
Can anyone manage a big bank these days? Should anyone try?
Or should we simply conclude that playing in the modern world of derivatives is best left to those whose survival is not critical to the nation’s economy, and who do not benefit from government-backed deposit insurance?

The VIX Bounce: Cutting Through the Noise  
Adam Warner, Schaeffer’s Investment Research
If it seems like All Things Volatility acted a little better this week, it’s because, well, it did act a bit better.
The CBOE Market Volatility Index (INDEXCBOE:VIX) itself actually had a nice gain in percentage terms, popping about 24% from last Thursday’s close to yesterday.

Cyprus Fear Fuels VIX ETFs Again
Wall Street Sector Selector
VIX and VIX ETFs are on the march again, after more news surrounding the Cyprus mess shook up investors.  The VIX Index rose 10.42% to close at 13.99, while the iPath S&P 500 VIX Short Term Futures ETN (NYSEARCA:VXX) gained 2.88% and the VelocityShares Inverse VIX ETN (NYSEARCA:XIV) lost 2.85%.

A small dollar trade in the financials
Andrew Giovinazzi, MarketWatch
How many times have we seen this story before? Some issue in the EU, although this time it looks smaller, is throwing cold water on everyone’s parade. I think the EU holding the line on lending money is a good thing in the long run, and the Cypriot politicians are going to have to make the creditors pay somehow. It is unpleasant but necessary.

JPMorgan Silent Partner Revealed in Whale Fiasco
Jonathan Weil, Bloomberg
One of the best parts about last week’s Senate hearing on JPMorgan Chase & Co. (JPM)’s London Whale trades is that we finally got a clear picture of whose side the regulators were on during the early days while the bank’s executives tried to contain the unfolding debacle.

What Investors Need To Know About The ETF Price War
Tom Anderson, Forbes
The exchange-traded fund business resembles an episode of HBO’s Game of Thrones. Alliances have been formed, surprise attacks have been launched and everyone wants to be king. And why not? ETFs are the fastest-growing segment of the staid mutual fund industry.

HFT Has Run Its Course In The U.S. Equity Market 
Matt Samelson, Advanced Trading
High-frequency trading has blown through the business life cycle stages in five short years and is already on the decline.


CME details clash over reduced grain-trading hours
Reuters (via Chicago Tribune)
CME Group Inc. said its plan to reduce grain trading hours is not the “perfect answer” for all its customers and for the first time detailed a clash over the proposed new schedule.

CBOE Holdings Is ‘Viable Takeout Candidate’  
Barron’s (subscription)
Sandler O’Neill + Partners We believe extension of a license agreement now makes the CBOE Holdings a viable takeout candidate.

Nasdaq Files to Change Order-Matching Priorities on PSX
Tom Steinert-Threlkeld, Traders Magazine
Nasdaq OMX Group has formally requested permission to change the algorithm that matches orders on its PSX exchange so that it prioritizes the time at which an order arrives instead of the size of the order.

CBOE, CFE, C2, and CBSX Trading Schedule for the Good Friday Holiday (full text)
Press Release (CBOE)
CBOE Holdings, Inc. (NASDAQ: CBOE) announced the following trading schedule for Chicago Board Options Exchange (CBOE), CBOE Futures Exchange (CFE), C2 Options Exchange (C2), and CBOE Stock Exchange (CBSX) in observance of the Good Friday Holiday:

– Thursday, March 28: CBOE, CFE, C2 and CBSX will have regular trading hours for all products.

– Friday, March 29:    CBOE, CFE, C2 and CBSX will be closed.

For more information on how this holiday closure will affect Quarterly Index Series (QIX), Quarterly Option Series (QOS) and Short-Term Options Series (Weekly Options), please refer to CBOE Information Circular IC13-021, which may be accessed at: http://www.cboe.com/framed/PDFframed.aspx?content=/publish/InfoCir/IC13-021.pdf§ion=SEC_ABOUT_CBOE&title=CBOE – CBOE


CFTC ‘neglect’ of Sef rules angers platform providers
Miriam Siers, FX-Week
After missing numerous deadlines to finalise the criteria for Sefs, the CFTC will not publish the rules until late April at the earliest, much to the frustration of market participants


How to Use Options to Benefit From Paired Trades
Steve Smith, Minyanville
It is necessary to weigh the inputs, the difference in stock price, and any upcoming events in trying construct a balanced paired position. Options can make that process a lot easier.

A Safe Bet on Big Banks
Steven M. Sears, Barron’s
Ride financial sector momentum with call options that will gain value as the banks return to health.

Option Premiums are Made of Only These Two Things – Know Your Options
When trading options, it’s important to understand these two definitions.
It could mean the difference between making money and losing money.
** I suspect our readers already know all this but figured it was worth putting here in case someone new to options comes across this. -JB

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