JLN Options: First Trust To Launch VIX ‘Tail Hedge’ Fund

Aug 29, 2012

Lead Stories

First Trust To Launch VIX ‘Tail Hedge’ Fund
Brendan Conway, Barron’s
The rise of volatility trading products continues. First Trust Advisors is set to launch what it’s calling the First Trust CBOE S&P 500 VIX Tail Hedge Fund on Thursday, according to an NYSE Arca trader notice this afternoon. The fund will trade under the ticker VIXH.

More On This Week’s VIX ‘Tail Hedge’ Fund Launch
Brendan Conway, Barron’s
The Twittersphere didn’t exactly lay out the welcome mat for the First Trust CBOE S&P 500 VIX Tail Hedge Fund (VIXH), which launches on NYSE’s Arca exchange on Thursday. Here’s a deeper look at how this fund plans to hedge against market calamity, judging by the prospectus.

Emerging Stocks Retreat for Fourth Day on Commodities, Earnings
Michael Patterson and Ian C. Sayson, BloombergBusinessweek
Emerging-market stocks dropped for a fourth day, sending the benchmark index (VXEEM) to the lowest in three weeks, as falling commodities dragged down producers and Chinese companies posted lower earnings.
The MSCI Emerging Markets Index lost 0.4 percent to 952.61 by 10:59 a.m. in New York. Brazil’s Bovespa stock index sank 2 percent, led by losses for oil company OGX Petroleo & Gas Participacoes SA and JBS SA (JBSS3), the world’s largest beef producer. The index was led lower by a gauge of raw-material shares, which fell for a sixth day, as Jiangxi Copper Co. dropped 5.1 percent. Air China and Evergrande sank at least 2.9 percent on first-half earnings.

OptionMonster Daily Volatility Report with Jamie Tyrrell of Group1 Trading:


August slowdown squeezes profits at US exchanges-Sandler O’Neill
A steeper-than-expected drop in trading volumes in August amid low volatility, weakened investor confidence, and complacency ahead of the upcoming U.S. presidential elections is set to weigh on the profits of U.S. exchanges, Sandler O’Neill analyst Richard Repetto said on Wednesday.

NSE exploring tie-up with Qatar Exchange
Palak Shah, Business Standard
The National Stock Exchange (NSE) and Qatar Exchange are exploring opportunities to enhance cooperation between the two bourses and also work out a business plan. Currently, Financial Technologies (FT), the promoter of the MCX group has a presence in the region through a 44 per cent stake in Dubai Gold and Commodity Exchange (DGCX), which is emerging as one of the key exchange platforms for trading rupee-dollar contracts outside the country.


SEC Charges Eight in Georgia-Based Insider Trading Ring
Press Release
The Securities and Exchange Commission today charged eight individuals living in the Griffin, Ga., area for their involvement in an insider trading ring that generated more than $500,000 in illegal profits based on nonpublic information about an upcoming company merger.
The SEC alleges that local accountant Thomas D. Melvin, Jr. exploited confidential information from a client who was on the board of directors at Chattem Inc., a Tennessee-based pharmaceutical company known for such over-the-counter products as Allegra, Gold Bond, and Icy Hot.


OptionsCity clients empowered with Metro on ICE electronic markets
Press Release
OptionsCity Software, Inc., a leading provider of electronic trading solutions, announced today that OptionsCity Metro clients who are connected to the InterContinentalExchange (ICE) will continue to demonstrate significant success in the marketplace and foresee a seamless transition in the midst of an analog-to-digital shift in the ICE.


Looking To Bet On Volatility? Think Short-Term
Randy Warren, Forbes
Hedging against inflation or the next global economic crisis would be much more straightforward if it were possible to use the volatility in the markets to your advantage by investing in the VIX (a gauge of implied volatility). However, the VIX is a mathematical calculation, not a tangible, investible asset.

Options: Does ‘Active’ Mean ‘Profitable’?
The most active options generally aren’t for retail investors
Lawrence Meyers, InvestorPlace
One thing that option investors often look at is which options are experiencing the highest trading volume. But there are different theories on the interpretation of high-volume options trading.
One that carries a lot of weight with me is that institutions are placing speculative bets on the movement of a given stock or index. Since institutions are just like traders in the general public, it stands to follow that because they are able to trade in large volumes, getting on the correct side of a trade for even a few pennies could result in a very large profit. The other angle that I buy into is that options are used to hedge positions, so certain stocks with earnings approaching might see increased option volume.
The question for you, the retail investor, is whether you can profit from this information.

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