JLN Options: Beyond Heinz, Options Trades Draw Scrutiny

Feb 19, 2013

Lead Stories

Beyond Heinz, Options Trades Draw Scrutiny
Kaitlynn Kiernan, The Wall Street Journal
A windfall bet made in H.J. Heinz Co. options one day before a buyout was announced Thursday prompted regulators to act quickly, freezing assets they suspect are tied to the trade.
But the Heinz bet, which the Securities and Exchange Commission said could have paid out $1.7 million, was just the latest in a series of unusual options trades made ahead of the disclosures of big deals and other news that moved share prices.
** See press release below under “Regulation” from the SEC regarding the Heinz case. –JB

Volatility Falls Most Since 1930s as Stock Funds Gain
Whitney Kisling, BloombergBusinessweek
Price swings in U.S. stocks are narrowing the most since the Great Depression, a signal of reviving investor confidence that’s fueling the bull market poised to enter its fifth year.

Putting The Range-Bound VIX Into Perspective  
Jon Haghayeghi, Seeking Alpha
As SPY continues to break record highs, it is natural to see the VIX taper down, but how low can the VIX go and for how long? This article is designed to put the current move of the VIX into perspective and to explain high probability ways to profit from this abnormally low volatility.

VIX ETFs continue to drop despite the upcoming sequestration deadline on March 1st
Wall Street Sector Selector
2013 has not been a good year so far for the VIX, as the VIX Index and VIX ETFs have not been able to break the ’15′ barrier since the New Year, suggesting that investors are simply not scared of what could happen come March 1st, when multiple spending cuts kick in.

Investors Finally Shed Fears
Tom Lauricella, The Wall Street Journal (via Yahoo Finance)
In the constant battle between fear and greed for U.S. investor sentiment, fear appears finally to be losing ground.
Individual investors are doing more stock trading. Mutual-fund companies are seeing money being put to work in both stocks and bonds. Advisers say they are hearing from investors who had been hunkered down for years but now are feeling more comfortable that another big meltdown isn’t lurking around the corner.

With Herbalife Options, Icahn Repeats Netflix Playbook
JJ Kinahan, Forbes
A few months ago, I wrote about how Carl Icahn used call options when to build up his exposure to Netflix (NFLX) and now it appears he is using a similar strategy in Herbalife (HLF).

optionsXpress Reduces Commissions on Futures Products and Introduces Simple, Straightforward Fee Structure
Press Release (via Yahoo Finance)
optionsXpress, Inc. (“optionsXpress”), a wholly-owned subsidiary of Charles Schwab, announced today that it has replaced its tiered commission structure for futures and futures options with new pricing of $3.50 per contract. Clients have access to optionsXpress’ powerful, easy-to-use trading platform and robust package of tools, education, and support for futures trading – now at a lower cost. 

TradeStation Once Again Declared “Best” in Six Major Categories by TASC Readers; Rated Best Trading System for Stocks and Futures for the Ninth Consecutive Year
Press Release (MarketWatch)
TradeStation, a Monex Group company and award-winning broker-dealer and futures commission merchant, continued its winning streak in the 2013 Readers’ Choice Awards given by Technical Analysis of Stocks & Commodities (TASC) magazine, topping all other brokers in six major categories.

Options Expands U.S. Operations, Anticipates Strong Growth in 2013    
Press Release (PR Newswire)
Options, the provider of the Options PIPE Private Financial Cloud services platform for the exchange, banking, trading and investment communities, today announced that it will open an office in Chicago next month in response to increasing demand for the company’s services in this major derivatives trading hub.
** Welcome to the Windy City! –JB


Hart-Scott-Rodino Act Waiting Period Expires for IntercontinentalExchange Acquisition of NYSE Euronext
Press Release (NYSE Euronext)
IntercontinentalExchange (NYSE: ICE) and NYSE Euronext (NYSE: NYX) today announced the expiration of the waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act in connection with the proposed combination of the two companies. The waiting period expired Friday, February 15.
Expiration of the HSR waiting period satisfies one of the regulatory requirements for completion of the merger. The transaction remains subject to additional regulatory requirements, as described in the Registration Statement on Form S-4 filed with the U.S. Securities and Exchange Commission, including competition approvals in Europe.

Cleartrade Exchange launches market data portal
Press Release (Finextra)
Cleartrade Exchange (CLTX), the Singapore Regulated Futures Exchange, today launched its new Data Centre web portal. The CLTX Data Centre is the only free-to-market portal which consolidates market information for freight and commodity derivatives contracts.

Annual review of the BEL-Indices  
Press Release (NYSE Euronext)
NYSE Euronext (NYX) announces the results of the annual review for the BEL 20, BEL Mid and BEL Small indices. The decisions taken today will take effect from Monday 18 March 2013.


SEC Freezes Assets in Swiss-Based Account Used in Suspected Insider Trading Ahead of Heinz Acquisition
Press Release (SEC)
The Securities and Exchange Commission today obtained an emergency court order to freeze assets in a Zurich, Switzerland-based trading account that was used to reap more than $1.7 million from trading in advance of yesterday’s public announcement about the acquisition of H.J. Heinz Company.

For S.E.C., Obstacles Aplenty in Pursuit of ‘Suspicious’ Heinz Trading
Peter J. Henning, Dealbook
Just a day after the buyout of H.J. Heinz was announced, the Securities and Exchange Commission took aim at an account, claiming it was used to trade on inside information about the deal to reap potential profits of over $1.7 million.


Hedging Against a Drop in the S&P 
Steven M. Sears, Barron’s
Buying put options on an S&P exchange-traded fund at different levels can create a good hedge. Also, how the brave can play Hess.

VIX Hits 6 Year Low: 1 Move To Make And 1 To Avoid 
Sammy Pollack, Seeking Alpha
On Friday, the VIX traded down to a six-year low amid increasing market optimism. Investors should use this as an opportunity to make some important moves. And, there is one mistake investors must av


Don’t Short The Market, Buy Volatility Instead 
Stephen Aniston, Seeking Alpha
Being long the VIX (VIXY) is politically incorrect, but you should still do it occasionally. It could be the asymmetrical trade of the year.
After all, who in their right mind would want market turbulence? The buyer universe couldn’t be happier right now.

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