JLN Options: CBOE FUTURES EXCHANGE TO LAUNCH SECURITY FUTURES TRADING IN EMERGING MARKETS VOLATILITY INDEX

Jan 6, 2012

Lead Stories

CBOE FUTURES EXCHANGE TO LAUNCH SECURITY FUTURES TRADING IN EMERGING MARKETS VOLATILITY INDEX
CHICAGO – January 6, 2012 — CBOE Futures Exchange, LLC (CFE) announced today that it will launch trading in security futures on the CBOE Emerging Markets ETF Volatility Index (Index ticker: VXEEM; futures symbol: VXEM) on Monday, January 9, pending regulatory approval.
The VXEEM Index reflects the implied volatility of the iShares MSCI Emerging Markets Index exchange-traded fund (ETF) (ticker: EEM). EEM options were the eleventh most actively traded option at CBOE in 2011.
In addition to hedging emerging markets volatility exposure or making direct plays on emerging markets volatility, VXEM security futures – in conjunction with other volatility products – will allow market participants to trade cross-index or cross-asset volatility. Barclays Capital will be a Lead Market Maker for VXEM security futures.http://jlne.ws/yDtlgC

New futures tied to emerging markets
Chris McKhann, optionmonster.com
The Chicago Board Options Exchange is launching new futures based on emerging-markets options on Monday. The CBOE Emerging Markets ETF Volatility Index (VXEEM) is based on the options of the iShares MSCI Emerging Markets Fund (EEM). The exchange-traded fund gives broad exposure to the emerging markets, including China, South Korea, Brazil, Taiwan, Russia, and India.
The VXEEM contracts will have some issues similar to those of VIX futures, such as odd expirations and limited access, but I am hopeful that this will be a successful product.
http://jlne.ws/zftnX3

Emerging Markets VIX Futures Begin Trading Next Week, CBOE Says
By Jeff Kearns and Nina Mehta, Bloomberg – Jan 6, 2012
Volatility futures linked to emerging-markets stocks begin trading on the Chicago Board Options Exchange Jan. 9, according to a statement from the largest U.S. equity derivatives market.
The futures track the CBOE Emerging Markets ETF Volatility Index (VXEEM), a gauge of options prices and expected price swings for the iShares MSCI Emerging Markets exchange-traded fund. The U.S.-listed ETF tracks 859 companies in 21 nations, from Samsung Electronics Co. to China Mobile Ltd. to OAO Gazprom. Barclays Plc is the lead market maker for the futures, CBOE said.
http://jlne.ws/z90sji

CBOE S&P 500 3-Month Volatility Index Heralding A Return To Normalcy
ETF Daily News January 6th, 2012
Bill Luby: With the political season heating up, it seemed like an opportune time to work “normalcy” into one of my posts again and what better way to do that than by putting under the microscope one of my favorite overlooked indices: the CBOE S&P 500 3-Month Volatility Index, which I typically reference with the more pithy VXV ticker symbol.
http://jlne.ws/A1Dpyg

Volatility. It s Here to Stay.     
January 6, 2012
Elizabeth Wine, Securities Technology Monitor
Amidst the worried debate over whether the United States will tumble into recession this year, market watchers agree on one thing: volatility is here to stay.
Even if policymakers in Europe solve the debt crisis swiftly and their U.S. counterparts come to agreement on how to handle this country’s own debt woes, Wall Street expects markets will continue to gyrate unpredictably.
http://jlne.ws/x8WF0N

OPTIONS REPORT: BofA’s Stock Surge Flushes Out Bulls
WSJ.com
–Bullish trading in Bank of America has run roughly double the average this week
–Some options bets nearly double in one session as Bank of America’s stock jumps 8.6% Thursday
–Put sellers bet that shares of Avon Products can hold recent gains before February
(Updates throughout with closing stock and options prices.)
By Chris Dieterich OF DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–Bank of America Corp.’s (BAC) stock got bludgeoned last year as the worst performer on the Dow Jones Industrial Average, but investors are using recent strength to stake out bullish options bets. Bank of America’s shares rose 50 cents, or 8.6%, to close at $6.31 after topping $6 for the first time in nearly two months. The stock knit together its first five-session winning streak in more than a year. In 2011, the stock’s 58% decline was pockmarked by both seven- and eight-session skids.
http://jlne.ws/ylFBi7

Exchanges

SEC Blesses CBOE Stock Exchange Deal
By JACOB BUNGE, WSJ.com
The Securities and Exchange Commission has approved the planned takeover of the National Stock Exchange Inc. by the CBOE Stock Exchange LLC, which is partly owned by the Chicago Board Options Exchange.
Regulators’ approval gives a green light for the union of two of the smallest U.S. stock-trading platforms, which together represent about 0.6% of daily turnover in domestic securities, according to data from BATS Global Markets.
http://jlne.ws/yla9dx
Silly Politics Beg for Market Discipline
Fox Business
Written By Al Lewis Published January 06, 2012
Yossi Beinart, chief executive of the North American Derivatives Exchange, wanted to be up and running with a new set of options this week that would have allowed investors to bet on the 2012 election. Who will be president? Which party will control the House or Senate? People would have been able to trade futures contracts on these questions. Instead, the Commodity Futures Trading Commission on Wednesday decided to put this proposal under a 90-day review. Meantime, one of the regulator’s five commissioners has said Beinart’s idea amounts to “political poker.”
http://jlne.ws/zjkOtd
BATS December Equities Market Share Up, Options Off Slightly
Traders Magazine Online News, January 6, 2012
BATS Global Markets reported earlier this week its U.S. equities matched market share totaled 11.2 in December, down slightly from 11.5 percent in November, but up from 9.5 percent a year ago. The exchange operator saw an average daily matched volume of 710.7 million shares. The exchange operator in November saw an average daily matched volume of 843.6 million shares.
According to Rosenblatt Securities’ latest report, BATS BYX monthly consolidated volume was 2.42 percent for November, up from 2.32 percent in October. BATS Options saw its matched market share come in at 2.1 percent in December, off from the 3.1 percent level achieved in November, up from 0.7 percent from one year ago. BATS Options had an average daily matched volume of 345, 880 contracts last month, with 524,998 contracts traded on December 16.
http://jlne.ws/w4cMfl

Regulation

MF Global Inquiry Turns to Its Primary Regulator
By BEN PROTESS and AZAM AHMED, NYTimes.com
Terrence Duffy of the CME Group testified at a Senate hearing about MF Global’s missing money.Andrew Harrer/Bloomberg NewsTerrence Duffy of the CME Group testified at a Senate hearing about MF Global’s missing money. Federal authorities investigating the collapse of MF Global have expanded their inquiry to include the actions of the CME Group, the operator of the main exchange where the commodities brokerage firm conducted business, according to people briefed on the matter.
CME, which also served as MF Global’s pr
imary regulator, has come under heavy criticism after $1.2 billion in customer money disappeared from MF Global. The Commodity Futures Trading Commission, the government agency leading the case, is scrutinizing CME’s conduct in the days before MF Global filed for bankruptcy on Oct. 31.
http://jlne.ws/Ax7epO
No Misconduct Evidence in 1,000% Profit Trades
By JACK BOUBOUSHIAN, Courthouse News Service
CHICAGO (CN) – A Spanish trader may keep the $500,000 he made on potash stock options, a return of more than 1,000 percent, because the SEC cannot prove insider trading, a federal judge ruled. In August 2010, two Spanish men, Juan Jose Fernandez Garcia and Luis Martin Caro Sanchez bought “relatively risky” stock options in Potash Corporation of Saskatchewan, a company that mines potash, a key ingredient in fertilizer.
http://jlne.ws/wVyO37

Options Education

Robert Engle Selected as the Recipient of the 2011 IAFE/SunGard Financial Engineer of the Year Award
New York, January 6, 2012 — The International Association of Financial Engineers (www.iafe.org) and SunGard (http://www.sungard.com) today announced that Robert F. Engle, the Michael Armellino Professor of Finance at New York University and 2003 Nobel Laureate for Economics, has been named the 2011 IAFE/SunGard Financial Engineer of the Year (FEOY). The award will be presented to Dr. Engle on February 2, 2012, at the New York Stock Exchange in New York City, during the IAFE/SunGard FEOY Award Gala Dinner.
Commenting on his 2011 FEOY award, Dr. Engle said, “I am very pleased to be honored as Financial Engineer of the Year at this challenging time. The goals of improved risk management and responsible performance have never been more important.”
He is currently the Director of the newly created NYU Stern Volatility Institute and is the Co-Founding President of the Society for Financial Econometrics (SoFiE), a global non-profit organization housed at NYU.
http://jlne.ws/zO08m5

John Lothian Newsletter

We visit more than 100 websites daily for financial news (Would YOU do that?)

“John Lothian and Company… our industry intelligence.”

Rick Lane

CEO, Trading Technologies

Past Options Newsletters

Pin It on Pinterest

Share This Story