JLN Options: CBOE to Launch Trading in CBOE Emerging Markets ETF Volatility Index Options on January 31

Jan 24, 2012

Lead Stories

CBOE to Launch Trading in CBOE Emerging Markets ETF Volatility Index Options on January 31
CHICAGO, Jan. 24, 2012 /PRNewswire/ (Press Release) — The Chicago Board Options Exchange (CBOE) announced today that it will begin offering trading in options on the CBOE Emerging Markets ETF Volatility Index (VXEEM) on Tuesday, January 31. The new options contract follows the introduction of trading in CBOE Emerging Markets ETF Volatility Index security futures (futures symbol: VXEM) at CBOE Futures Exchange (CFE) on January 9, 2012. Investors can use either or both products to hedge emerging markets volatility exposure or to make direct plays on emerging markets volatility. CBOE Emerging Markets ETF Volatility Index options and security futures are the first of several ETF-based volatility index products planned for launch at CBOE and CFE in 2012. http://jlne.ws/dqtww6

NYSE-Deutsche Boerse May Lack EU Support
By Aoife White and Nandini Sukumar – Jan 24, 2012
NYSE Euronext (NRX) and Deutsche Boerse (DB1) AG are unlikely to garner enough support from European Union commissioners to overturn a looming veto over their plan to create the world’s largest exchange, according to four people familiar with the situation. The EU’s antitrust chief, Joaquin Almunia, won’t face significant opposition from other EU commissioners to his proposal to block the deal at a Feb. 1 meeting, said the people who can’t be identified because the discussions aren’t public. The European Commission, the EU’s executive arm, is led by 27 commissioners drawn from each of the bloc’s member states. They must jointly approve EU decisions.
http://jlne.ws/yi2vB4
SCENARIOS: Deutsche Boerse-NYSE Euronext Deal Options
By Reuters January 24, 2012
European Commission officials are set to vote in early February on Deutsche Boerse’s proposed $9 billion takeover of NYSE Euronext to create the world’s biggest stock exchange. 
The 27 European Commissioners will cast their votes following a recommendation to block the deal by antitrust commissioner Joaquin Almunia, who is worried the combined entity will have more than a 90 percent market share in some key listed derivatives contracts in Europe. Almunia has said European markets must remain fair, efficient and competitive for both companies and investors and that competition between exchanges is necessary. http://jlne.ws/zdWITR

New ETFs spur RRSP options
Canadian Exchange Traded Funds have become a money magnet
By Peter Evans, CBC News Last Updated: Jan 24, 2012
Many financial gurus say the key to successful investing is diversification. It wasn’t all that long ago that getting broad market diversification in a portfolio was costly and difficult, but exchange-traded funds have made do-it-yourself investing more practical — and there are some big changes happening now in the Canadian ETF market as a result. In the past, an investor would either have had to deal with a stock broker – an endangered species these days – to buy individual shares in companies. Or maybe pay to have a professional money manager manage their investments in a mutual fund.
http://jlne.ws/z3rq23

Crude Options Volatility Falls as Futures Rise on Iran Oil Ban
By Barbara Powell – Jan 23, 2012
Crude oil options volatility fell for the first time in three days as underlying futures rose after the European Union agree to ban oil imports from Iran.
Implied volatility for at-the-money options expiring in March, a measure of expected price swings in futures and a gauge of options prices, was 29.8 as of 3:30 p.m. in New York, down from 30.3 on Jan. 20. March crude oil rose as much as 1.9 percent in intraday trading before settling 1.3 percent higher.
“We rallied back so volatility came off,” said Fred Rigolini, vice president of Paramount Options Inc. in New York.
Crude for March delivery rose $1.25 to settle at $99.58 a barrel on the New York Mercantile Exchange, the first increase in four days.
http://jlne.ws/y6pnz9
OPTIONS REPORT: RIM Reshuffling Barely Dents Market’s Outlook–Options market’s Research In Motion volatility outlook is little changed Monday following BlackBerry maker’s executive succession
–Research In Motion options trading at twice normal clip, but trading is mixed
–Analyst says market signals view that executive reshuffling “not that much of a change”
By Brendan Conway Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–The U.S. options market’s muted reaction to Research In Motion Ltd.’s (RIMM) management reshuffling underscores the extent to which traders were already anticipating turmoil for the beleaguered BlackBerry maker’s stock. Pricing gauges for put and call options to buy and sell the company’s Nasdaq-listed stock barely budged Monday with word that longtime co-Chief Executives Jim Balsillie and Mike Lazaridis would be replaced by the little-known Thorsten Heins. The shakeup follows a plunge in the company’s stock over the last year as weak earnings reports and a series of service outages fueled investor doubts of the company’s competitive position versus the likes of Apple Inc. (AAPL). In a conference call, the Waterloo, Ontario, company touted the change and downplayed takeover speculation.
http://jlne.ws/yvlsCn

Exchanges

BATS Exchange Launches First Primary Listing With iShares ETF Today BATS Global Markets Press Release
KANSAS CITY, Mo., Jan. 24, 2012 /PRNewswire/ — BATS Global Markets (BATS), a global operator of stock and options markets, today announced the iShares MSCI Norway Capped Investable Market Index Fund (BATS: ENOR) will begin trading today on BATS Exchange, the first of nine new exchange traded funds (ETFs) sponsored by BlackRock, Inc.’s (NYSE: BLK) iShares® ETF business scheduled to commence trading on the Exchange beginning this week.
http://jlne.ws/zs6KwU

Technology

Options IT Sees Surge in Demand Among Hedge Fund Managers for its Private Cloud-Deployed Financial Office ServiceFinishes 2011 Signing 16 PIPE Core Clients, Adding Nearly 350 End Users Globally for its Flagship Financial Office Delivery and Support Service
Press Release, LONDON, Jan 24, 2012 (BUSINESS WIRE) — Options IT, provider of the Options PIPE Private Financial Cloud services platform for the exchange, banking, trading and investment communities, today announced a strong surge in demand in 2011 among hedge fund managers for its PIPE Core financial office delivery and support service. Options IT signed 16 PIPE Core hedge fund clients across North America, Europe and Asia, representing nearly 350 new end users of the service in 2011. The solid growth in demand indicates a sustained recovery in the alternative investment management space globally and a continued adoption of on-Demand technology infrastructure services like Options IT’s Private Financial Cloud services platform.
http://jlne.ws/zWg9pg

Strategy

A Bull and Bear Bet
By STEVEN M. SEARS, Barrons.com
Investors concerned the stock market is poised for a short-term technical correction, but afraid to miss a potential rally, can use a simple options strategy to simultaneously be a bull and a bear.
By “strangling” the stock market with a put and call option that have different strike prices, and the same expiration date, investors can benefit from a sharp decline, or sharp rise.
Buying the February 132 call on the SPDR S&P 500 (ticker:
SPY), and the February 130 put on the SPDR S&P 500 lets investors leverage intense crosscurrents roiling the market. (The SPDR S&P 500 exchange-traded fund was trading at 131.24 in midday trading Tuesday.) Many investors think the Standard & Poor’s 500 index, recently at 1304, has risen too far too quickly since the year began.
http://jlne.ws/ymEIaT

Are Buy-Write ETFs Worth The Cost?
By: Eric Dutram, Zack’s Investment Research
January 24, 2012
Although stocks have begun the new year on a high note, many investors remain uncertain about the market nonetheless. Weaker than expected earnings at some firms and continued concerns over the health of key markets such as China and Europe could weigh down securities throughout the first quarter of the year. In light of this, some investors have taken to strategies that allow investors to stay allocated to the market but that could offer some level of downside protection as well.
http://jlne.ws/x3piYX

Options Education

The Newest Innovation in SPX Options
Tuesday, January 24, 2012
By James Bittman, Senior Instructor, Chicago Board Options Exchange
New Friday-afternoon-settled options on the S&P 500 (SPX) have hit the marketplace, says Jim Bittman of the Chicago Board Options Exchange (CBOE), who describes the benefits and helpful tips for trading them.
As an option trader, you are probably aware of the SPX options, but there’s a new product from the CBOE, the SPXpm options.
Our guest today is Jim Bittman to talk about that. So, Jim, first of all, what is the new product?
Well, the traditional S&P 500 index options called SPX came out of the 80s, where the options stopped trading on Thursday and they settled Friday morning, which is very unusual compared to options on stocks that continue trading all the way through Friday afternoon. So, we added a new all-electronically-traded contract. It’s the same size, but it settles on Friday afternoon—the same way other ETF options, stock options, and some other index options settle. With institutional money looking at the S&P 500 index, we wanted to make this product available for them, so for quarter ends, for year ends, we have the afternoon settlement.
http://jlne.ws/w6tVOU

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