JLN Options: C2 Options Exchange to List SPXpm “Super Leaps” Options on March 1

Feb 28, 2012

Lead Stories

C2 Options Exchange to List SPXpm “Super Leaps” Options on March 1

CHICAGO, Feb. 28, 2012 /PRNewswire/ — CBOE Holdings, Inc. (NASDAQ: CBOE) announced today that it will launch SPXpm long-term index option series — “Super LEAPS” options — on its C2 Options Exchange (C2) on Thursday, March 1.
CBOE Holdings’ Super LEAPS, which initially will be available for SPXpm options, feature longer-dated expirations than standard LEAPS® options (Long-term Equity AnticiPation Securities(SM)). LEAPS options contracts, developed and introduced by the Chicago Board Options Exchange (CBOE) in 1990, currently limit expirations to up to three years. The Super LEAPS modification will extend SPXpm expirations to as long as five years. SPXpm is C2’s all-electronic, p.m.-settled version of CBOE’s S&P 500 Index options contract (SPX).
SPXpm Super LEAPS were created for insurance companies, pension funds and other institutions that currently hedge their longer-dated equity index exposures in the over-the-counter (OTC) market, but also want the pricing transparency afforded by exchange-traded index options. The added transparency allows customers to see and access publicly-available bids, offers and the latest market prices – a benefit unavailable in the OTC market.

NYSE Amex Continues To Sift Error-Trades, Ronin Capital Eyed
Exchange staff at NYSE Euronext’s (NYX) Amex market on Monday continued to work through thousands of mistaken stock-options trades made early Friday, the result of what traders said was likely a glitch in an automated trading strategy. Chicago-based trading group Ronin Capital LLC was behind approximately 31,000 erroneous transactions made over three minutes just after trading opened Friday, many executed at prices far off the going market rate, according to people familiar with the matter. Reconciling the thousands of transactions, most of them very small in terms of contracts traded, could mean paring back profits made by firms who bought or sold options at the erroneous prices, or exposing them to losses from other trades made in response to the mistaken transactions.


CHICAGO, February 28, 2012 — CBOE Holdings, Inc. (Nasdaq: CBOE) today announced that Edward T. Tilly, President and Chief Operating Officer, will present at Raymond James 33rd Annual Institutional Investors Conference in Orlando, Florida on Monday, March 5, 2012, at 8:40 a.m. Eastern time.
The presentation, to be broadcast live over the Internet, can be accessed at www.cboe.com under Investor Relations, Events and Presentations. Approximately 24 hours after the live presentation, an audio Webcast will be available for replay at the same address for seven days. CBOE Holdings, Inc. (NASDAQ: CBOE) is the holding company for Chicago Board Options Exchange (CBOE), C2 Options Exchange and other subsidiaries.

Invest like Buffett can’t
By Kirk Spano, MarketWatch
When people talk about Warren Buffett, Charlie Munger and Berkshire Hathaway /quotes/zigman/583979/quotes/nls/brk.b BRK.B -0.99% , talk generally centers on what they are investing in. However, since Buffett made his comment about being able to make 50% annual returns if only Berkshire had less money to manage, I have been far more focused on investing in what Buffett would invest in, if, in fact, he was managing far less money. …
CBOE Holdings is one of the largest markets for derivatives trading. CBOE is the leader in the growing options and futures trading markets in America and is likely to benefit from efficiencies over time, and potential mergers. While this facilitator of weapons of mass destruction might be seem a counterintuitive pick, the fact is that government is requiring that derivatives move to regulated exchanges. CBOE will benefit from this over time as a regulated market leader and as other derivatives look for places to trade.

Bursa Malaysia in derivatives clearing launch
By Jeremy Grant in London, FT.com
Bursa Malaysia has become the latest exchange to overhaul its post-trade infrastructure with the introduction on Tuesday of new clearing and settlement system for derivatives.  The move is a sign that exchanges in Asia are trying to make their systems more resilient as volume in derivatives and equities trading has been growing faster than in the more mature markets of Europe and the US.  Bursa Malaysia said the new system, developed in conjunction with KRX, the Korean exchange, and CME Group, the US exchange operator, would “pave the way for the introduction of new derivative futures and options products”.
UPDATE: CME Group Discloses Subpoenas In MF Global Probes
–CFTC, Northern District of Illinois issued subpoenas to CME
–CME says participation in probes already disclosed
–SIPC trustee also seeking information related to MF Global collapse
–CME anticipates lawsuits naming the exchange to be consolidated in New York
CME Group Inc. (CME) disclosed it received two subpoenas last November to produce “information and witnesses” in probes related to the collapse of brokerage MF Global Holdings (MFGLQ). A grand jury in the Northern District of Illinois and the Commodity Futures Trading Commission both issued subpoenas to Chicago-based CME, days after MF Global’s Oct. 31 bankruptcy filing. CME disclosed the moves in a regulatory filing Tuesday, and separately received a request for documents from the Securities Investor Protection Corp., which took over liquidation of MF Global’s estate following the futures firm’s downfall.
“We’re cooperating with investigating authorities, and there are lawsuits concerning MF Global that name CME Group,” said a spokeswoman for the Chicago exchange operator. She said CME’s participation in the probes had been previously disclosed.


Sebi goes slow on nod for new derivative products
Equity markets regulator not comfortable with utility of complex products for small investorsN Sundaresha Subramanian, Business Standard / Mumbai Feb 29, 2012, 00:01 IST
The Securities and Exchange Board of India (Sebi) is going slow on approvals of several index-based derivative products. Several new products proposed by both the exchanges had not been cleared by the regulator owing to concerns over their suitability to the small investors, said an official familiar with the development. Clearance of new index products has taken a backseat since U K Sinha took over as the chairman of Sebi over a year ago. The regulator has not cleared several products, including derivatives based on the India Vix, an index that tracks the volatility of the market, and rupee denominated European indices, such as FTSE 100 and DAX. Also options on foreign indices such as Dow Jones and S & P 500, which are already trading in futures contracts are
yet to see the light of day.


Volatility Rising? Options for Hedging the 2012 Rally (video)
By Jeff Macke, Yahoo! Finance
If you’ve caught the explosive rally in stocks since late last year you’re left with a high class problem: how can you lock in some of your gains without either incurring horrific short-term tax gains or leaving yourself out of the market when stocks are still rising? Jon Najarian, co-founder of TradeMonster.com joins me in the attached clip to discuss some options strategies to add protection during the 2012 rally. The CBOE Volatility Index (VIX) has fallen from over 23 to around 18, a greater than 20% drop in 2012 alone. Despite this Najarian says the smart money players in the pits “are betting the VIX will keep moving lower.” Drops in the VIX, often referred to as the “Fear Index” typically accompany benign, if not rallying stock prices. Think of options pricing as you you would think of the cost of flood insurance; when the tides are rising the price is high, during droughts you can’t give insurance away at any price.

Options Education

 Montréal Exchange Launches Two Financial Education Initiatives in Derivatives
Educational programs reinforce MX’s position as Canada’s leader in derivatives
MONTRÉAL, Feb. 28, 2012 /CNW/ – Montréal Exchange Inc. (MX), a wholly-owned subsidiary of TMX Group and Canada’s derivatives exchange, today announced the launch of two financial education initiatives – the Options Trading Simulation and the Canadian Derivatives Exchange Scholars Program. The two new programs were created to support university finance students who are interested in learning about derivatives products, as well as to support the province’s university finance departments’ derivatives education.
“We are excited to be launching these new programs and partnering with universities,” said Alain Miquelon, President and CEO, Montréal Exchange. “Our goal is to encourage students to learn more about the derivatives market and position MX as the centre of excellence of these highly specialized products.”

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