JLN Options: ‘Fear Index’ Surging? This Chart Says It’s a Speed Bump

Apr 18, 2013

Lead Stories ‘Fear Index’ Surging? This Chart Says It’s a Speed Bump
Brendan Conway, Barron’s
The “fear index,” which jumped 18% on Wednesday, is up 30% this month. But dig a little deeper to see the way the market prices S&P 500 (SPY) volatility has barely budged.
http://jlne.ws/13kP7t6 Quantitative easing is like a ‘huge glass of warm milk’ for VIX
Tom Bemis, MarketWatch
Nicholas Colas, chief market strategist at ConvergEx, argues Wednesday that if these were normal times, the fear index would be double where it is.
http://jlne.ws/XTCqai Volatility Readings Signaling Systemic Changes for Stock, Gold, FX?
John Kicklighter, Daily FX
Volatility is used by many as a measure of ‘fear’. Indicators like the CBOE’s VIX Volatility Index are created by using the implied volatility backed out of options based on the underlying market. This measures investors are pricing in as the expected level of activity for the foreseeable future (most popular volatility indexes have a 30 day outlook). And for those that are watching these indicators, there is a concerning rumble that has not yet shown through price action itself.
http://jlne.ws/13kRewR Is Gold Volatility Sending the VIX Higher?
Adam Warner, Schaeffer’s Investment Research
If you’re of the belief that volatility ripples across asset classes, then you really have to pause and take serious note of this lift in volatility in gold.
http://jlne.ws/17se1HA The VIX Is Getting Ready to Take Market on a Ride
Jeff Cox, CNBC
Volatility’s prolonged absence from the stock market appears to be coming to an abrupt end.
After being largely invisible for the past nine months—coinciding with a sharp equity rally—several signs indicate that instability is coming back.
http://jlne.ws/XTC8QJ Low-Volatility ETFs Still Thriving as Market Wobbles
Tom Lydon, ETF Trends
Market volatility in the wake of the financial crisis has damaged the psyche of average investor. Consequently, the exchange traded fund industry has seen heavy interest in low-volatility investment strategies that try to smooth out the swings.
http://jlne.ws/13kPpAe How the World’s Smartest Investor Lost His Way
Alex Dumortier, The Motley Fool
Yesterday, the Financial Times reported that the fall in the price of gold has cost high-profile hedge fund manager John Paulson at least $1.5 billion personally this year. No need to shed tears over his fate — when you reach a point at which you can lose $1.5 billion of your wealth, it’s unlikely you will ever end up clipping coupons. Still, this reversal of fortune contains some interesting lessons for ordinary investors.
http://jlne.ws/13kRrAh Wall Street has fewer bolting brokers amid stronger U.S. markets
Ashley Lau, Reuters
Fewer Wall Street brokers appear to be jumping ship in 2013, as strong U.S. markets kept more teams in place in the first quarter, financial-services recruiters said this week.


Dark Pool Brawl Breaks Out
Scott Patterson, The Wall Street Journal
A behind-the-scenes brawl has broken out between two market powers that represent opposite ends of the stock-trading spectrum.
In one corner is NYSE Euronext, which claims to represent the good of the average investor and transparent trading on public exchanges. In the other corner: Credit Suisse Group AG, which runs the nation’s largest dark pool, Crossfinder.
http://jlne.ws/XTC0AF CME Group Announces New Physically Delivered 1,000 oz. Silver Futures Contract    
Press Release (PR Newswire)
CME Group, the world’s leading and most diverse derivatives marketplace, today announced the launch of a new physically delivered Silver (1,000 oz.) futures contract, scheduled to begin trading in June 2013. This contract will be listed with, and subject to, the rules and regulations of COMEX.


SEC to Move Past Financial Crisis Cases Under Chairman White
Joshua Gallu, Bloomberg
Mary Jo White, the first former prosecutor to serve as chairman of the U.S. Securities and Exchange Commission, has pledged to run a “bold and unrelenting” enforcement program at the agency charged with regulating Wall Street.
http://jlne.ws/15hFcIp CFTC orders The Linn Group, Inc. to pay $400,000 for account deficiencies and supervision failures
Press Release (CFTC via Futures)
The U.S. Commodity Futures Trading Commission (CFTC) today announced that it entered an Order requiring The Linn Group, Inc. (TLG), a Chicago-based Futures Commission Merchant (FCM), to pay a $400,000 civil monetary penalty for failing to properly handle, monitor, and report the customer funds that it maintained, as required by the Commodity Exchange Act (CEA) and CFTC Regulations, and for supervision failures.  The CFTC Order also requires TLG to retain a consultant to review and improve TLG’s procedures as necessary to comply with the CEA and Regulations and to cease and desist from violating the provisions of the CEA and Regulations, as charged.


Unequal options 
Dan Barnes, FOW
According to a recent Tabb Group report high-frequency trading (HFT) is dominating US options trading, making technology adoption a key determinant of success. But with tight budgets, falling trading volumes and low volatility, keeping up with the pace of technology adoption is proving too much for many firms.


Laugh in the Face of Volatility with VXX 
Jim Woods, InvestorPlace
Stocks are in tumult. Down huge on Monday, up big on Tuesday, and down big again on Wednesday. Gold, silver and other commodities are in freefall, and exogenous events such as the bombing in Boston and ricin-laced mail to Senators and President Obama have got Wall Street flustered.

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