Lead Stories

CBOE Claims Victory Over ISE In Legal Fight Over Index Options
Jacob Bunge, Of DOW JONES NEWSWIRES (via NASDAQ)
The parent of the Chicago Board Options Exchange on Friday claimed victory over a rival stock-options market in a years-long battle over the right to offer contracts on major stock-market indexes.
The Illinois Appellate Court ruled in favor of CBOE Holdings Inc. (CBOE) and major index providers in a legal dispute with the International Securities Exchange, which has sought to list its own options linked to equity benchmarks such as the Standard & Poor’s 500 and the Dow Jones Industrial Average.
http://jlne.ws/LNywt1

ISE loses appeal; index exclusivity holds
Press Release
The Chicago Board Options Exchange (CBOE) and The McGraw-Hill Companies, Inc. (McGraw-Hill) today announced that the Illinois Appellate Court has ruled in favor of CBOE, McGraw-Hill and CME Group Index Services, LLC regarding the index options litigation brought against the International Securities Exchange, LLC (ISE).
Today’s ruling affirms an injunction that prohibits ISE from listing or offering a market for trading in options on either the S&P 500 Index (S&P 500) or the Dow Jones Industrial AverageSM (DJIA), as to which CBOE holds exclusive licenses.  The injunction also forbids The Options Clearing Corporation (OCC), which clears trading for all U.S. options exchanges, from clearing options on these indexes unless they are traded pursuant to CBOE’s exclusive licenses.
http://jlne.ws/LiXGgI

Rumor Mill: PEAK 6 Acquiring Penson Worldwide?
The Options Insider
Rumors are pouring into The Options Insider that PEAK 6, the parent company of brokerage firm Options House, may have purchased Penson Worldwide at the close of business on Thursday.
http://jlne.ws/JCmuCw

Embattled Penson Stock Plumbs Fresh Lows
Jacob Bunge, The Wall Street Journal
Shares in brokerage and clearing firm Penson Worldwide have dropped almost 30% to 21 cents, earlier falling as low as 16 cents. The firm earlier this week disclosed plans to tap $5.5 million in regulatory capital in order to pay down interest on outstanding debt.
http://jlne.ws/LNuAbH
** If the rumor is true (listed before this story) one has to wonder why Penson stock is down 17% (as of this writing)

CBOE and C2 to List Options on Facebook (FB) on Tuesday, May 29
Press Release
The Chicago Board Options Exchange (CBOE) and C2 Options Exchange (C2) today announced they will list options on Facebook (FB) beginning Tuesday, May 29.
Susquehanna Securities will serve as the Designated Primary Market Maker (DPM) for Facebook options at CBOE. C2 does not use a DPM system.
The contract specifications for Facebook options are as follows:
Initial strike price: 16 – 49 in one-dollar increments
Position limit: 250,000 contracts
Expiration cycle: March expiration cycle with initial months listed as Jun, Jul, Sep and Dec
In addition, on May 29, CBOE will list both the Facebook January 2013 options series and the Long-term Equity AnticiPation Securities (LEAPS) options with a January 2014 expiration. C2 will list the January 2013 options series on Facebook on the same date.
http://jlne.ws/LvEkkv

IntercontinentalExchange Announces Record Brent Crude Option Volume
Press Release
IntercontinentalExchange, a leading operator of global regulated futures exchanges, clearing houses and over-the-counter (OTC) markets, reported record daily volume in ICE Brent Crude options of 78,508 contracts on May 24, 2012. The previous daily volume record was 63,494 on May 2, 2012.
Average daily volume for ICE Brent Crude options is 45,664 to date in May, up more than 500% from May 2011. Open interest in ICE Brent Crude options is 952,239 as at May 24, 2012.
http://jlne.ws/KfRS7J

Crude Options Volatility Falls as Oil Rises
Barbara Powell, Bloomberg
Crude-oil options volatility fell as underlying futures rebounded from a seven-month low.
Implied volatility for at-the-money options expiring in July, a measure of expected price swings in futures and a gauge of options prices, was 26.2 percent at 3:55 p.m. on the New York Mercantile Exchange. Volatility rose for the first time in three days yesterday, to 27.6, when futures slipped below $90 for the first time since November.
http://jlne.ws/KnEz3x

Exchanges

CME Group to Expand CBOT Grain and Oilseed Open Out-Cry Trading Hours During USDA Crop Reports
Press Release
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it will offer expanded floor trading hours in its CBOT grain and oilseed futures and options during major United States Department of Agriculture (USDA) Crop Reports, pending CFTC certification. The floor trading open will be changed to 7:20 a.m. CST, from 9:30 a.m. CST, on mornings of specified reports beginning June 12, 2012.
http://jlne.ws/KpyjZc

KCBT to Alter HRW Wheat Futures & Options Open Outcry Trading Hours on USDA Report Days
Press Release
The Kansas City Board of Trade has filed a submission with the CFTC to alter the start time of open outcry trading for the KCBT’s flagship hard red winter wheat futures and options contracts on USDA report release dates effective June 12, corresponding with the next release date.
Open outcry sessions will open at 7:20 a.m. CT on USDA report release dates. The USDA reports are released at 7:30 a.m. CT. On all other dates, the open outcry market (Monday-Friday) will open at 9:30 a.m. CT. The open outcry market will continue to close at 1:15 p.m. CT. Daily settlements are based on the 1:15 p.m. close.
http://jlne.ws/K5XgKN

Regulation

OCC Received Proposed Systemic Designation From U.S. Regulators
By Silla Brush, Bloomberg
OCC, an organization that clears and settles all trades on U.S. options exchanges, has been designated by U.S. regulators as systemically important to the financial system, according to spokesman Jim Binder.
http://jlne.ws/Jz8C79

Technology

What is Coming for High-Speed Trading at the Speed Traders Workshop 2012 Beijing
Press Release
Edgar Perez’s The Speed Traders: An Insider’s Look at the New High-Frequency Trading Phenomenon That is Transforming the Investing World, Presenting The Speed Traders Workshop 2012 Beijing, China, “How Algorithmic and High Frequency Traders Leverage Profitable Strategies to Find Alpha in Equities, Options, Futures and FX”, May 30.
http://jlne.ws/JCpe2A

Strategy

What To Look For In Facebook Options
Seeking Alpha
I knew that Facebook was in trouble last week when my mother asked me how she could get some shares. FB touched $45 on its market debut Friday but is now well below its $38 IPO price.
It is early, to be sure, and this disappointing start may have little bearing on the stock’s levels in coming years. But in the meantime, Facebook’s options should provide some interesting opportunities when they roll out next week.
http://jlne.ws/JCqlQ2

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