JLN Options: Hedge Funds Shorts Match October With VIX Near 26

Jun 6, 2012

Lead Stories Hedge Funds Shorts Match October With VIX Near 26
Nikolaj Gammeltoft and Cecile Vannucci, Bloomberg
The selloff that erased $1.78 trillion from American equity values has pushed the cost of options to the highest levels of 2012 and prompted hedge funds to add to short sales at the fastest rate since October.
The Chicago Board Options Exchange Volatility Index surpassed 26 last week, a level not seen since December. The gain left the gauge near its price just before the Standard & Poor’s 500 Index slumped 12 percent in August and September 2011, data compiled by Bloomberg show. As the VIX has risen, an International Strategy & Investment Group measure of hedge fund bullishness has retreated by 7.4 percent.
http://jlne.ws/LsZAXY
** The bulls seem to be backing off. -JB VIX’s Rise Has Been in Slow Motion, Still Could Pack Pop
Chris Dieterich and Kaitlyn Kiernan, The Wall Street Journal
The fear gauge’s recent rise has been a leisurely one, but VIX watchers warn that gradual gains shouldn’t be mistaken for investor complacency.
The Chicago Board Options Exchange Volatility Index is up more than 10 points over the last two months, from 14 to 24, but has yet to rise to levels that signal extreme worry even as stocks give back sharp gains notched in the first part of this year.
A barrage of bleak economic reports from the U.S. and China, combined with worries about Greece’s future in the euro zone and Spain’s banks, have nearly driven the Standard & Poor’s 500-stock index into a correction, or a 10% decline from its April peak.
http://jlne.ws/L3vVrc VIX Investors Head to the Vix-its
Tom Lauricella, The Wall Street Journal
While the VIX hasn’t been on a moon shot – a fact noted earlier today on MarketBeat – it has moved higher since the latest eruption of worries about Europe and the pace of global growth.
On the surface, one might think that another Euro-land freak-out would have investors clamoring for exchange traded funds that track the VIX.
Au contraire!
http://jlne.ws/M9h1Ol Traders Dump Leveraged Volatility Bets
Brendan Conway, Barron’s
Tough day for traders who’ve been counting on their hedges. The most leveraged ones are among the worst performers in the entire market Wednesday.
http://jlne.ws/KiNp1E
** Maybe the bulls aren’t backing off. – JB Volatility is now normal, Canadian investors say
Reuters
Most Canadian investors say volatility is now a fact of life in financial markets, and not all of them think that is a bad thing. A survey released on Tuesday showed 72 percent of respondents see market volatility as the “new normal”…
http://jlne.ws/Kgqi5W

Exchanges

BATS U.S. Equities Market Share Climbs in May, Options Flat
Traders Magazine
BATS Global Markets reported its U.S. equities matched market share totaled 11.7 percent in May, rising from 11.5 percent in April, and jumping up from 10.8 percent a year ago. The exchange operator saw an average daily matched volume of 830.6 million shares last month.
http://jlne.ws/LbmOoR BATS Global Markets Reports May Monthly Results With Record BYX Market Share
Press Release
BATS Global Markets (BATS), a leading operator of securities markets in the U.S. and Europe, today reported continued strong U.S. equities market share, which reached 11.7% in May, up from 10.8% one year ago and 11.5% in April. The BATS BYX Exchange set another monthly U.S. equities market share record in May with 3.0%, while the BATS BZX Exchange recorded 8.7%. Monthly market share for BATS Options held steady at 3.0% for the month.
http://jlne.ws/LbsoYl NYSE Euronext To Present At The Morgan Stanley Financials Conference
Press Release
NYSE Euronext (NYX) today announced that Michael Geltzeiler, Group Executive Vice President and Chief Financial Officer of NYSE Euronext, will present at the Morgan Stanley Financials Conference at The New York Palace Hotel in New York City on Tuesday, June 12, 2012 at 2:25 PM (ET).
A live webcast of the presentation will be available on NYSE Euronext’s Investor Relations website: http://ir.nyse.com/.
http://jlne.ws/LbzFr5

Technology

NYSE Technologies Collaborates with Xignite to Deliver Market Data Web Services
Press Release
NYSE Technologies, the commercial technology division of NYSE Euronext, and Xignite Inc., provider of web-based market data services, have announced their agreement to launch a new service providing access to real-time, historical, and reference market data for all NYSE Euronext markets via the Internet. In extending the benefits offered by the NYSE Technologies Capital Markets Community platform introduced in 2011, NYSE Technologies Market Data Web Services is geared towards non-latency sensitive clients and those in remote locations. The first phase offers real-time retail reference pricing for NYSE, NYSE MKT, and NYSE Arca markets.
http://jlne.ws/NK8aW0

Strategy

With volatility the new normal, traditional traders evolve strategies to remain relevant
Nick Przybyciel, Medill Reports Chicago
May capped off a hectic trading month, and while some traders are preying on the perpetual state of market volatility, others are being forced to evolve new strategies to stay relevant…
But what happened in May wasn’t out of touch with contemporary history, as volatility has become the new normal in markets since the Great Recession hit in 2008. For some traders, such as speculators utilizing high frequency trading strategies and technologies, market chaos provides opportunity to move in and out of positions and make a quick dollar.
http://jlne.ws/JXGmPj

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