Lead Stories

Financial Advisors Are a Crucial Part of the Investing Community
Frank Tirado – OCC
As the world’s largest equity derivatives clearing organization, OCC knows that financial advisors are a crucial part of the investing community. According to Cerulli Associates, there are roughly 285,000 financial advisors in the U.S. and on average they each manage money for about 150 clients, so their investment influence is substantial.
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Deutsche Bank says derivatives exposure fears overblown: paper
Reuters
Deutsche Bank (DBKGn.DE) is continuing to cut back the size of its derivatives book, which is not as risky as investors may believe, Chief Risk Officer Stuart Lewis told German weekly paper Welt am Sonntag.
“The risks in our derivatives book are massively overestimated,” Lewis told the paper. He said 46 trillion euros in derivatives exposure at Deutsche appeared large but reflected only the notional value of the contracts, while the bank’s net exposure to derivatives was far lower, at around 41 billion euros.
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Liquidity Illusion Burns Traders Blindsided by Pound’s Crash
Lananh Nguyen and Andrea Wong – Bloomberg
The inexplicable volatility that roiled the British pound last week came as no surprise to Bank of America Corp., which just days earlier warned that liquidity in the $5.1 trillion-per-day global currency market was far worse than anyone imagined.
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Corporate Bonds Have Become a Deal-Seeker’s Nightmare
Tracy Alloway – Bloomberg
There are no bargains left in U.S. corporate credit, according to Deutsche Bank AG.
Ultra-low interest rates in Europe, Japan and the U.K. have spurred investors to seek returns by buying the debt sold by U.S. companies with investment-grade ratings, leading some analysts to label the market as “the only game in town.” But the rush into the asset class and the rising cost of protecting against currency-risk on dollar-denominated securities means foreign investors are facing an increasingly unpalatable menu of options when it comes to generating higher returns by buying U.S. corporate debt.
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Is The VIX Ready To Pop Again?
Seeking Alpha
Now that we have the September jobs report out of the way, the markets will now focus on the November elections and the high probability of a December rate hike. The jobs numbers were a bit below consensus estimates, but they were above the 150,000 level that the Fed views as moderate growth. The Fed believes anything north of 120,000 takes care of labor market demographics, so 150,000 is not too hot or cold for a rate hike to take place.
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Financial markets continue to price in Clinton win after debate
Caroline Valetkevitch and Rodrigo Campos – Reuters
Wall Street stock index futures were little changed throughout Sunday’s highly contentious presidential debate, indicating that markets continue to view that Democrat Hillary Clinton holds an edge in the Nov. 8 election against her Republican rival, Donald Trump.
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Sunday Night Trading of VIX and Stock Index Futures and Currencies During the Presidential Debate
Matt Moran – VIX Views
Regarding the financial market movements Sunday night around and during the second presidential debate, below are some highlights.
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ETFs to Hedge Election Risks Ahead
Max Chen – ETF Trends
With the markets seeming rather calm, trading within a range bound level belies potential volatility of the U.S. presidential election season. Consequently, investors may consider strategies like exchange traded funds that track the CBOE Volatility Index to hedge the upcoming risks.
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Exchanges

MCX to introduce options trading by January
LiveMint
Multi Commodity Exchange of India Ltd (MCX), India’s largest commodities bourse by turnover, plans to introduce options trading by January to boost revenue after the markets regulator permitted the trading of the derivatives at the end of last month.
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CME Sees Growth In Trade Volumes; Metals And Energy Major Drivers
Nasdaq
CME Group ( CME ) saw a 6% year on year (y-o-y) increase in its trading volumes across key asset classes in September. Amid a subdued global macroeconomic environment, gold and silver have attracted investor interest, and as a result metal trading volumes grew by 30% y-o-y during the month. Further, the continuous shift in oil prices due to the demand-supply gap and OPEC’s unwillingness to cut down production has led to increased volatility in the market. This partly drove a 25% surge in CME’s energy trading volumes.
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Strategy

Options Traders Bet on More Pain for Gold
Ben Eisen – WSJ
Options traders are betting gold prices have more room to fall.
Last week, as gold suffered its biggest weekly decline in three years, the cost of protecting against a decline in the shiny metal became more expensive than protecting against a rise, according to Macro Risk Advisors.
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Why Large Stocks Wake Up at This Time of Year
Mark Hulbert – WSJ
History suggests that some of the best-performing stocks between now and year’s end will be those of the very largest firms.
If so, that would certainly represent a reversal of what has taken place so far this year. Through Sept. 30, the Russell 2000 index (a widely used small-cap benchmark) gained 11.5%, compared with just 6.8% for the 50 largest publicly traded U.S. companies (as judged by the Russell Top 50 Mega Cap Index).
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How to Sell Long-Term Equity Options
Robert Lang – The Street
Selling, rather than buying, options is one of the biggest advantages options traders have. The reason is simple: Around 80% of options expire worthless, giving the seller a leg-up and allowing him or her to bank profits over and over again. But even though this tends to be a short-term game, there is a way to sell long-term options — and win.
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