JLN Options: Former CBOE head Alger B. 'Duke' Chapman dies at 81

Feb 20, 2013

Post Market Volume and Volatility Movers
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Chart provided by Livevol (Tuesday, Feb 19, 2013 – 4:25p). This report shows stocks that have the highest stock volume, and greatest IV30 change for the day. Individual issues must have a minimum trade price greater than $5.00. The minimum average option volume must be at least 200. The scan excludes 2x,3x ETF products from the results.

Lead Stories

Former CBOE head Alger B. ‘Duke’ Chapman dies at 81
Lynne Marek. Crain’s Chicago Business
Alger B. “Duke” Chapman, who was chairman and CEO of the Chicago Board Options Exchange from 1986 to 1997, died Monday in Little Rock, Ark., of congestive heart failure at age 81.
http://jlne.ws/Zr92Z7
** Rest in peace Duke.  Our condolences to Duke’s family.  –JB

Has the (Anti-) Gold Rush Begun?  
Steven M. Sears, Barron’s
Gold bugs beware.
Investors are assiduously positioning deep in the options market for gold to edge lower even after last week’s decline of almost 4%.
http://jlne.ws/YGvIOX

Market Malaise Leaves Options Looking Cheap
Kaitlyn Kiernan, The Wall Street Journal
All is quiet on the options front.
The S&P 500 booked its smallest one-week point change in nearly a year last week, and an options market reading on future market volatility suggests mild moves will remain the norm over the next month.
http://jlne.ws/W3WC8k

West meets East’s derivatives drive
Future and Options Intelligence
Trading on equity options, single stock futures (SSF) and index derivatives followed the global trend of year-on-year increases in January, with surges recently restricted to emerging markets stretching to Europe and the US writes Jonathan Watkins.
http://jlne.ws/Yam5t6 

Making 20 Times Your Money On Heinz Call Options In 24 Hours Requires Inside Information
Robert Lenzner, Forbes
We will be fascinated to find out the identity of the lucky tippee who knew Berkshire Hathaway was going to buy Heinz for $72.50 a share– and bought call options when the stock was $60 a share.
http://jlne.ws/W3Um0Y
** I’ve said it before and will say it again.  How does someone think that a trade such as this will go unnoticed or unscrutinized by the SEC? –JB

FBI Probes Trade in Heinz Options  
Michael Rothfield, and Kaitlyn Kiernan, The Wall Street Journal
The Federal Bureau of Investigation has begun a criminal investigation into a big options trade made the day before last week’s announcement of the blockbuster $23 billion buyout of H.J. Heinz Co.
http://jlne.ws/W3Z12V

Competition heats up in equity options
Ruth Hughes Liley, FTSE Global Markets
The Netherlands is a fraction the size of the US, but it could prove to be a crucible for the development of equity options trading in Europe as the battle for advantage in the growing and lucrative listed options market heats up.
http://jlne.ws/W3ULAA

The Start of Another Financial Crisis  
Melanie Rodier, Wall Street & Technology
The stability of global markets could be once again threatened by another massive financial derivatives crisis, according to market participants.
Due to a loophole called the “futurization of swaps” as a result of a change in the way derivatives are packaged and sold, traders are bypassing regulations aimed at containing risk and instead, are investing more money in riskier trades.
http://jlne.ws/YapFDL

Can the Rally Continue?
Sheraz Mian, Zacks
There has been no shortage of skeptics of the market’s recent momentum, myself included. But Mr. Market keeps powering higher, getting close to its all-time high point in October 2007. The uptrend appears to be so well entrenched that nothing can derail it. The Fiscal Cliff drama went to the wire, but Mr. Market remained essentially unruffled throughout December. And the devil-may-care attitude seems to be the only explanation for the upcoming budget sequester – now less than two weeks away.
http://jlne.ws/Yap5py

Exchanges

ICE Clear Credit Introduces Clearing for iTraxx
Press Release (ICE)
IntercontinentalExchange (NYSE: ICE), a leading operator of global markets and clearing houses, announced today it has received regulatory approval for its U.S. based credit default swap clearing house, ICE Clear Credit, to clear the Markit iTraxx Europe CDS indices. Clearing for the contracts will launch on Feb. 25.
http://jlne.ws/Zr99Ux 

Regulation

Expected timeline for finalizing OTC derivatives regulations not enough, says opinion piece  
FinCAD
While Financial Stability Board chairman Mark Carney has stated his expectation that global regulators will finalize the margin requirements involved in trades of derivatives that are not cleared centrally by September 2013, a Reuters opinion piece written by Huw Jones asserts that this deadline is too strict.
http://jlne.ws/YajkYJ

U.S. regulators weigh fixes after trading debacles
Sarah N. Lynch, Reuters
Exchanges and other trading platforms would have to perform tests to prevent software errors from unleashing havoc on the market under proposed rules being crafted by regulators, U.S. Securities and Exchange Commission Chairman Elisse Walter said.
http://jlne.ws/W3WqpN

Technology

NYSE Puts Block Crosses into Floor Traders’ Handheld Devices
Tom Steinert-Threlkeld, Traders Magazine
The handheld device is the latest block crossing venue.
The New York Stock Exchange is taking the wraps off a four-month-old system that allows floor traders to work trades in blocks of 10,000 shares or more, using electronic broking devices.
http://jlne.ws/Yaiawq

Strategy

Bear Put Spreads: A Roaring Alternative To Short Selling  
Investopedia
Two of the best features of options are that they afford an investor or trader the opportunity to achieve certain objectives and/or play the market in certain ways that they might not otherwise be able to. For example, if an investor is bearish on a particular stock or index, one of the choices is to sell short shares of the stock.
http://jlne.ws/YajvmU

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