Lead Stories

Deutsche Börse expands network
Automated Trader | 21st February 2012
Upgraded network to link financial centres with Deutsche Börse Groups trading systems and Frankfurt co-location data centre
As part of the planned introduction of the new Eurex trading system in December 2012, Deutsche Börse Group will be gradually expanding its network in the next few months. The financial centres of Amsterdam, Frankfurt/Main, London, Paris and Zurich will in future be linked via redundant 10 Gbps connections. The links to other locations in Europe, the USA and Asia will be upgraded to 1 Gbps. The expansion project started in early February 2012 and should be completed in Q4 2012.
“After having successfully introduced our global trading infrastructure at our US options market International Securities Exchange, we are now taking the next logical step in Europe,” said Michael Kuhn, Deutsche Börse AG’s Chief Information Officer. “Our global customers will benefit from the expansion of our high-speed network. At the same time we are laying the foundations for our company’s further growth.”
http://jlne.ws/wLBO4I

CME Raises Stake in Dubai Mercantile Exchange in Recapitalization Plan
By Anthony DiPaola, Bloomberg – Feb 21, 2012
CME Group Inc. (CME), the world’s largest futures exchange owner, and Oman Investment Fund will raise their respective stakes in the Dubai Mercantile Exchange to support expansion at the Middle East oil bourse. CME Group’s Nymex division will double its holding to 50 percent, while Oman’s sovereign wealth fund will own 29 percent of the Dubai exchange, according to a PRNewswire statement released today. The DME will receive “significant new funds,” Chief Executive Officer Thomas Leaver said in a conference call, without providing further financial details. The Dubai exchange’s only product is the Oman crude futures contract.
http://jlne.ws/zzM6or

Apple Bulls Diverge From Nasdaq-100 Worries
By Kaitlyn Kiernan MarketBeat – WSJ
Apple bulls won’t let a dimmer outlook for Nasdaq-100 stocks dampen their optimism.
Options traders have piled into bullish Apple bets at the quickest rate ever to wager the tech bellwether will extend its 25% year-to-date gains, even as traders take a protective turn in options on the Nasdaq-100 — an index on which the iPhone and iPad maker has a 16.6% weighting.
http://jlne.ws/x67B68

U.S. Stock Options With Biggest Changes in Implied Volatility
By Bloomberg News – Feb 21, 2012
The following are the U.S. stock options that had the biggest percentage changes in implied volatility from the previous trading day as of 11:30 a.m. in New York. This {OSCH } search was limited to options that are more than 10 days from expiration, have trading volume of at least 200 contracts and have strike prices within 5 percent of the underlying security’s price.
http://jlne.ws/xify8B

Options on Futures

Oil Options Volatility Climbs as Crude Rises to Nine-Month High
By Ksenia Galouchko, Businessweek
Feb. 21 (Bloomberg) — Oil options volatility rose as crude climbed to the highest level in more than nine months after euro-area finance ministers agreed on a second bailout for Greece and Iran said it stopped selling oil to France and Britain. Implied volatility for at-the-money options expiring in April, a measure of expected price swings in futures and a gauge of options prices, was 30.2 as of 2 p.m. in New York, up from 28.8 on Feb. 17.
http://jlne.ws/w336Fl

Strategy

Hedging the S&P 500
By STEVEN M. SEARS, Barrons.com
Consider options on a popular stock-market ETF as a way to gird for a correction.
The hedge is your edge.
With the Standard & Poor’s 500 Index off to a strong start this year, Wall Street’s derivatives desks are doing brisk business helping clients protect their portfolios in the event of a correction. Because there is little general investor fear that the stock market will decline, the hedges are relatively inexpensive to buy. But the chance to buy hedges without paying a fear premium may soon end.
Already, very sophisticated investors are beginning to fret stock prices will soon fall — and they’re taking action.
Even though the Dow Jones Industrial Average is at the highest level in 52 weeks, some investors are buying puts on the SPDR S&P 500 ETF (ticker: SPY) that would increase in value if the U.S. stock market fell by 10%.
http://jlne.ws/y6cPAa
Will TVIX Go To Zero?
Bill Luby, VIX And More
Business Insider
The sudden surge of interest in TVIX (VelocityShares Daily 2x VIX Short-Term ETN) made it the most heavily traded VIX exchange-traded product (ETP) on Friday, as TVIX vaulted over the former king of the mountain, VXX. Part of the appeal of TVIX is to retail investors who have embraced this product with surprising swiftness in the last week or two. Some of the appeal of TVIX is a function of its volatility: this is a product that jumped from 15 last August to over 109 in early October, before falling as low as 13 earlier this month. Based on some of the questions I have received, it is also obvious than many new investors in TVIX do not understand the product they are trading.
http://jlne.ws/Ao0jMi

Options Education

THE OPTIONS INDUSTRY COUNCIL ANNOUNCES INVESTOR EDUCATION DAY IN ATLANTA MARCH 10
CHICAGO (February 21, 2012) – The Options Industry Council (OIC) today announced its first 2012 Investor Education Day (IED) scheduled for March 10 in Atlanta.
New for the Atlanta event, OIC has adjusted the format for the full day event, offering two different tracks for attendees based on their investment experience and skill level – Options Basics or Advanced Strategies. While Options Basics will teach fundamentals, strategies to get started and the risks/rewards of trading; Advanced Strategies will focus on concepts such as butterflies, condors and the Greeks.
Those interested in attending can obtain schedule and location details and also register through OIC’s website, http://www.optionseducation.org/seminars/investor_education_day.jsp, or by calling 1-888-OPTIONS (1-888-678-4667).

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