Goldman faces losses on erroneous trades
Arash Massoudi and Tracy Alloway and Neil Munshi – Financial Times
Goldman Sachs could lose as much as $100m after making erroneous trades that disrupted trading activity across multiple options exchanges on Tuesday, market participants have told the Financial Times.
Options Trades From Market Open Under Review by Exchange Owners
Nikolaj Gammeltoft – Bloomberg
At least three operators of U.S. options exchanges are reviewing trades that took place at the beginning of the day and NYSE Amex Options said most of the transactions may be canceled.
A “large number” of trades in tickers beginning with letters H through L in the first 17 minutes are being examined by NYSE Amex Options, it said in a statement. CBOE Holdings, the largest venue, said it is examining trades between 9:30 and 9:41 a.m. Nasdaq OMX Group Inc. is reviewing options transactions from 9:30 to 9:47 a.m., according to its website.
About 40 ETFs Are Halted During Volatility Brake Implementation
Nikolaj Gammeltoft & Whitney Kisling – Bloomberg
Trading was briefly halted today in about 40 exchange-traded funds and notes when the securities were added to a program aimed at curbing sudden price swings.
Protege-Backed Expedition Shuts Asia Volatility Fund After Loss
Bei Hu – Bloomberg
Expedition Advisors Ltd., backed by New York-based Protege Partners LP, is returning investor capital in its Asia volatility hedge fund after losses.
BofA: We See 5 Troubling Signs Of Complacency In The Stock Market
Sam Ro – Business Insider
In a new note to clients, Bank of America Merrill Lynch’s Stephen Suttmeier warns, “Market complacency suggests deeper downside risk.”
Videocast: September VIX calls
JPMorgan Says Buy Indian Options as Stock Swings Widen
Santanu Chakraborty – Bloomberg
India’s biggest stock-market swings in 16 months are poised to continue, boosting options prices as the prospect of reduced Federal Reserve stimulus spurs further weakness in the rupee, according to JPMorgan Chase & Co.
Leveraged ETFs, the Flash Crash, and 1987
Paul Vigna – The Wall Street Journal
Okay, this is going to be a wonky post. But it brings together a high-risk investing strategy, the flash crash, and the Crash of 1987, and shows how little-known corners of the investing world can still have a big market impact.
**Options are a part of it. -JB
Eurex to Enter Currency Market With Futures, Options Contracts
Nandini Sukumar – BloombergBusinessweek
Eurex will enter the foreign-exchange market for the first time as Europe’s largest derivatives exchange seeks to expand into an asset class dominated by its American rival CME Group Inc.
REGULATION & ENFORCEMENT
Oversight Board Faults Broker-Dealer Audits
Floyd Norris – Dealbook
Auditors performed complete and correct audits of at least three brokerage firms last year, the Public Company Accounting Oversight Board said Monday.
That amounted to only 5 percent of the 60 audits reviewed by the board, but it may still be a sign of progress. During the previous year — the first in which the board reviewed such audits — none of the 23 audits examined were found to be acceptable.
**Sounds like damning with faint praise to me but guess you’ve got to start somewhere. -JB
Wall Street star Philip Falcone admits wrongdoing in SEC settlement
Andrew Tangel – Los Angeles Times
A major Wall Street figure did something unusual in a settlement with the country’s top securities regulator: admit he did something wrong.
**Maybe admitting he did something wrong is his way to angle for an insanity plea. -JB
Obama asks regulators to speed up Wall Street reforms
Emily Stephenson – Reuters
President Barack Obama called top U.S. financial regulators to the White House on Monday, instructing them to speed up Wall Street reforms in the face of intense bank lobbying.
**I wonder if he said that and kept a straight face. -JB
Options Continues to Bolster Its Connectivity with the Addition of New Venues and Feeds in Both Europe and the US
This most recent deployment to the platform will see Options add HSBC and AllianceBernstein dark pools in Europe to its destinations, while the new market data feeds will include CBOE CSM, C2, CSM, BOX, CHX, and Nasdaq’s PHLX. The firm also announced that as a result of the CBOE connection, CBSX CSM and CFLEX will now be made available to clients.
How to Find Options Opportunities With Low Volatility
Minyanville (via NASDAQ)
I have discussed here and here how to find option opportunities by looking for stocks with unusually expensive options. A natural question is whether there are opportunities in stocks with options that are unusually cheap. And there are.
Pricing of VIX August and September Calls
Bill Luby – ETF Daily News
The monthly VIX futures and options expiration is a fascinating time from an options strategy perspective, as it marks the point in time in which VIX futures prices collide with the cash/spot VIX.
Volatility Trading Digest – Nearly Oversold
The Options Insider
Last week’s decline was not unexpected, as we became more cautious. Our primary concern was the potential damage that rising interest rates could cause along with deteriorating market breadth.
optionMONSTER Brings Trading Pros to San Francisco for Investment Conference
SAN FRANCISCO & CHICAGO — optionMONSTER is bringing together leading television personalities and educators for a one-of-a-kind stock and option trading conference on October 25-26 in San Francisco.