Buying Options for a Volatile 2017
Steven M. Sears – Barron’s
In 2017, trading patterns are likely to be so erratic and sector performance so uneven that at times the proverbial wall of worry may solidify into the real thing—especially if President-elect Donald J. Trump’s “QE4” stimulus policies, in particular lower corporate tax rates, differ from Wall Street’s expectations. Hence, one of the great trades of recent years—selling puts to profit from rising stock prices—may prove tricky. Investors may find greater rewards buying options. Call buying is around the highest levels on record, dating back to 1997. Bullish calls are trading at premiums to bearish puts, which is unusual since most investors buy bearish puts to hedge their stocks.
Quadruple witching day is not that scary for markets
Saqib Iqbal Ahmed – Reuters
Friday marked “quadruple witching day,” the quarterly simultaneous expiration of U.S. options and futures contracts, but ominous as it sounds, traders may have little to fear on this day in terms of volatility. While these days are still some of the biggest in terms of volume in options and stocks, technological advances and the availability of weekly options have robbed the day of some of its power to cause stock market gyrations, market watchers say.
Commodity options face implementation, logistics hurdles
Jayshree P. Upadhyay – LiveMint
MCX and NCDEX plan to launch trading in commodity options in January but haven’t yet approached Sebi to do so
Commodity exchanges may miss their own plans to start options trading by January as they are still figuring out how to price and settle commodity options, nearly three months after they were permitted to do so by the regulator, according to three people aware of the matter. The Securities and Exchange Board of India (Sebi) allowed commodity bourses to apply for one agricultural and one non-agricultural commodity options product on 27 September.
Itiviti Confirms Deutsche Borse has Signed Long-term Agreement to use Tbricks by Itiviti
Itiviti, a world-leading technology provider for the capital markets industry, today announced that Deutsche Borse has signed a long-term agreement to use its Tbricks by Itiviti platform. Tbricks by Itiviti is a modern system designed for constant change, combining a high-performance core with flexible, app-based business logic. Deutsche Borse will use Tbricks by Itiviti for Market Surveillance on Eurex providing real-time derivatives pricing and alerting together with submission of settlement prices.
Fidessa marks huge progress made servicing futures and options brokers
Luke Jeffs – FOW
Fidessa won Sell-side Trading System award for a record fifth year in a market segment tech firm has come to dominate
Fidessa takes home the award for Sell-side Trading System of the year for an unprecedented fifth consecutive year in a market segment it has come to dominate. According to a recent Tabb Group report, almost half of US FCMs use Fidessa’s system for their electronic execution, a remarkable statistic for a firm that has been in the derivatives market for less than a decade. According to Fidessa’s global head of derivatives Justin Llewellyn-Jones, Fidessa has succeeded with the sell-side by providing a solution to the challenges that are facing the major, global banks and brokers today.
2017 will be a year of FX industry M&A: A very detailed analysis on the changes that lie ahead
Andrew Saks-McLeod – FinanceFeeds
Recent M&A deals have been hundreds of millions as massive venues mop up institutional FX firms – not retail client bases for a few million. We examine in great detail what will cause consolidation this year and why it will be much higher up the ecosystem and for very high values, including perspectives from senior industry figures.
LSE, Deutsche Boerse plan January merger remedies
Luke Jeffs – FOW
LSE, D. Boerse were told Wednesday of the Commission’s specific concerns
The London Stock Exchange and Deutsche Boerse plan to offer as early as next month remedies to the European Commission’s concerns over their planned merger that were communicated to the exchanges on Wednesday, according to sources. The LSE Group and Frankfurt-based Deutsche Boerse are said by sources to be looking to tackle the European Commission’s concerns about their merger with remedies as early as January.
Nasdaq Year In Review: Growth In Non-Trading Segment Drives Otherwise Sluggish Performance From Trading Segment
The year 2016 has not been very impressive for trading as investors exhibited inclination towards risk-free assets amid deteriorating financial conditions during the first half of the year. However, NASDAQ still managed to grow its revenue by 7% in the first 9 months of 2016, with stock gaining nearly 23% since the beginning of the year. The company’s focus on growing its non-trading segment, along with growing demand for data-related products, have helped it remain resilient in challenging conditions. The trading volumes saw a surge in Q2 due to increased volatility from Brexit and the acquisition of ISE, which led to a significant increase in both the exchange’s market share in equity derivatives and the customer base requiring access and connectivity. However, the overall volumes have faced headwinds due to loss of market share and an industry-wide decline.
Introduction of customisable option multiplier for options volatility strategies
After the Trade Entry Service (TES) functionality has been introduced with Release 4.0, T7 provides two different possibilities for delta-neutral hedging of options trades
Agreement for dual listings on Nasdaq Dubai, ASE signed
Nasdaq Dubai and Amman Stock Exchange (ASE) have signed a Memorandum of Understanding (MoU) to explore cooperation possibilities including facilitating a process for dual listings.
****SD: From the article – “Nasdaq Dubai will expand its range of futures in a phased programme, including contracts on companies listed on other MENA exchanges as well as index futures and equity options.”
CBOE, C2 And CFE Trading Schedule For The Christmas And New Year’s Holidays
Regulation & Enforcement
ESMA prepares for MiFID II commodity derivatives regime
The European Securities and Markets Authority (ESMA) has published a new questions and answers (Q&A) document on commodity derivatives topics under the revised Markets in Financial Instruments Directive and Regulation (MiFID II/ MiFIR).
Chances of Dodd-Frank Reform Are ‘Zero’: Wasserstrom
Eric Wasserstrom, U.S, banks analyst at Guggenheim Securities, examines the recent rally in financial stocks and expectations for large-scale banking reform. He speaks on “Bloomberg Daybreak: Americas
Apple’s most bullish analyst bids adieu with another bold prediction
Jennifer Booton – MarketWatch
After a dozen years serving as a staunch Apple Inc. bull whose predictions rarely came true, Piper Jaffray’s Gene Munster ended his coverage of the company Friday with one final plea to buy Apple stock.
Munster, who has been overweight on Apple AAPL, +1.03% since he initiated coverage on the company in 2004, reiterated a $155 12-month price target on the stock, implying a 30% improvement from Friday afternoon trading prices. His target is one of the most bullish on Apple, $25 above the average target of $130, according to a FactSet survey of roughly 40 analysts.
U.S. Stocks Pare Gains as Yen, Treasuries Strengthen With Gold
Jeremy Herron and Kristine Aquino – Bloomberg
A cautious tone spread through financial markets as the last full trading week in 2016 began.
The dollar retreated versus the yen after a six-week rally and the Swiss franc extended an advance on haven bids after reports that Russia’s ambassador to Turkey was shot, exacerbating a sense of geopolitical tension. The S&P 500 pared gains that reached 0.4 percent in thin trading. Gold headed for the first back-to-back advance in three weeks. The yield on 10-year Treasury notes fell six basis points to 2.53 percent.
Learn Trading in Different Dimensions
Bob Lang – CBOE Options Hub
As traders and investors, we often see outcomes through the prism of win or lose. We will all have both over time, trading is not a game of perfect.The goal of course is to win more than you lose. Some measure their success where they make it into the win/loss column, and while it’s true we can only grow our accounts with more wins than losses, to me it’s not the only measure of success. But one of the toughest emotions to overcome is a bias toward direction, when what really needs to be examined is whether we should be looking at time or volatility.
Ukrainian Exchange Launches Bitcoin Futures Contracts Trading
Ukrainian Exchange announced today the launch of new futures contracts on an index price of Bitcoin. Requiring an initial margin of 30%, it says that the specifications of the contracts were recently approved and registered by the National Securities and Stock Market Commission of Ukraine.