JLN Options: Investors Spooked Ahead of Big Data Days Look to Put Options

May 1, 2013

Lead Stories

Investors Spooked Ahead of Big Data Days Look to Put Options 
Kaitlyn Kiernan, The Wall Street Journal
With key U.S. employment data looming Friday, a pair of central bank policy meetings this week and major stock benchmarks at record highs, options traders are getting defensive.
Options traders are zeroing in on short-term contracts that protect against declines in the SPDR S&P 500 exchange-traded fund and the iShares Russell 2000 Index Fund.
http://jlne.ws/12WkAST

CFTC Commissioner Proposes Derivatives Transaction Fee  
Jamila Trindle, The Wall Street Journal
Commodity Futures Trading Commission member Bart Chilton plans Wednesday to propose a transaction fee for derivatives markets, an idea that has been floated for years but has never gained traction in Congress.
http://jlne.ws/12Wua8b

The Options Industry Council Announces April Options Volume Rose 16 Percent
Press Release (OIC)
The Options Industry Council (OIC) announced today that 371,147,433 total options contracts were traded in April, which is up 16.11 percent compared to last year when 319,640,606 contracts were traded. This marks the best April volume on record.
http://jlne.ws/12WCnsX

Fed Seen Slowing Stimulus With QE Cut by End of This Year
Joshua Zumbrun, Aki Ito & Catarina Saraiva, Bloomberg
Chairman Ben S. Bernanke will probably reduce the Federal Reserve’s monthly bond buying in the fourth quarter to $50 billion from $85 billion as he begins to unwind record stimulus, economists said in a Bloomberg survey.
http://jlne.ws/12WkYR6

Will it take a big hack to goose the VIX back to life?
Wallace Witkowski, MarketWatch
Sure, stocks are grinding higher and testing new highs but that’s  against the backdrop of “meh” economic data. And let’s not forget the $85 billion a month the Federal Reserve is pumping into the economy with Japan promising to do its part too.
http://jlne.ws/12WvZSp

High-Speed Traders Exploit Loophole 
Scott Patterson, Jenny Strasburg and Liam Pleven, The Wall Street Journal
High-speed traders are using a hidden facet of the Chicago Mercantile Exchange’s computer system to trade on the direction of the futures market before other investors get the same information.
http://jlne.ws/Zn7b2S

CME Group Statement [Regarding high frequency trading story in The Wall Street Journal]
Press Release (CME)
CME Group, today released the following statement in response to today’s Wall Street Journal article:
While there can be instances of inconsistencies with any technology, CME Group is continually making improvements to our trading platform to increase efficiencies, including variability between the time a firm or customer receives its trade confirmation and it appears on the public data feed.  Out of the more than 300 million messages that come into our platform each day, there may be times when customers can experience a latency of a few milliseconds between the time they receive their trade confirmations and when that information is accessible on the public feed.  However, these instances are not consistent and vary across asset classes.
More…

Speed traders eyed after Twitter hack attack, U.S. regulator says
Douwe Miedema, Reuters
The phony tweet from the Associated Press’ hacked Twitter account, which sparked a short-lived panic in the stock market a week ago by saying that President Barack Obama was injured in two explosions at the White House, underscored the need to look at regulating automated trading, the top U.S. derivatives regulator said on Tuesday.
http://jlne.ws/12WuxQd

Tough times for hedge funds that bet on market tumult
Katya Wachtel, Reuters
Nelson Saiers, a trader and math whiz, runs the type of hedge fund that tends to perform best when markets are going haywire.
The $600 million Saiers Capital fund and other so-called volatility funds use complex trading strategies to take advantage of pricing discrepancies caused by gyrations in global financial markets.
http://jlne.ws/12WtD66

Finding Attractive Investment Yields In An Overlooked Area Of The Market
Wallace Forbes, Forbes
Eric Mancini: As I mentioned in our November interview,  at Traphagen Financial Group, we manage fully diversified stock, bond, and alternative client portfolios with an intense focus on risk management and how best to allocate among all investable asset classes.
http://jlne.ws/12Wy2Gj

After the Hash Crash: Worrying About the Next Glitch 
Ivy Schmerken, Advanced Trading
After last week’s Hash Crash, James Angel of Georgetown University told CNBC he’s worried about the next glitch. Circuit breakers are in place, but he’s not sure how they will react when the next stress hits.
http://jlne.ws/12WsrzD

Exchanges

Exchanges Win Dismissal of Market-Data Pricing Rule Case
Andrew Zajac & Nina Mehta, Bloomberg
NYSE Euronext (NYX), Nasdaq OMX Group Inc. and other exchanges can set prices for proprietary market data, a U.S. appeals court ruled, saying the Dodd-Frank financial reform law limits its right to review Securities and Exchange Commission decisions on the issue.
http://jlne.ws/12WvAj7

OCC Announces Cleared Contract Volume Rose 17% in April
Press Release (OCC)
OCC announced that cleared contract volume for the month was 376,392,187 contracts, a 17 percent increase from April 2012. OCC’s year-to-date total contract volume is down half a percent from April 2012 with 1,383,287,827 contracts.
http://jlne.ws/12WnrLz

CBOE Holdings Has High Hopes for Growth
Dan Caplinger, The Motley Fool
On Friday, CBOE Holdings will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise.
http://jlne.ws/12Wx64N

Nasdaq OMX Launches ETF Exchange  
Phil Albinus, Advanced Trading
The market maker has recast one of its three exchanges for the trading of exchange-traded funds. Just in time as it takes on dark pools before the SEC.
http://jlne.ws/12Ws34k

Intercontinental Exchange Net Income Declines on Energy Trading
Matthew Leising, Bloomberg
Intercontinental Exchange Inc. (ICE), which agreed to buy NYSE Euronext for $8.2 billion in December, said first-quarter net income dropped 8.4 percent as trading in energy and financial futures contracts fell.
http://jlne.ws/12WthML

MCX-SX to offer derivatives contracts on its key index 
FinCAD
MCX Stock Exchange (MCX-SX), a recently-launched Indian bourse, announced on April 29 that it plans to start offering futures and options derivatives contracts based on its key index SX40 starting in May, according to a statement.
http://jlne.ws/12Wyww1

Regulat

ion

CFTC to address systemic risks, moots ‘guidebook’ on swaps data
Chris Hall, The Trade
The Commodity Futures Trading Commission (CFTC) is to lay out its plans to bolster the stability of US derivatives markets with the publication of a concept release before the end of June.
http://jlne.ws/12WsRWW

SEC Proposes Rules for Cross-Border Security-Based Swap Activities
Press Release (SEC)
The Securities and Exchange Commission today voted unanimously to propose rules and interpretive guidance for parties to cross-border security-based swap transactions.
The proposal explains which regulatory requirements apply when a transaction occurs partially within and partially outside the U.S.
http://jlne.ws/17xWhMS

Technology

Trading Technologies Named as One of Chicago’s Most Innovative Companies in Annual Eureka Index
Press Release (TT)
Trading Technologies International, Inc. (TT), a leading global provider of professional futures trading software and solutions, received high rankings in the second annual Eureka Index. The index, created by Ocean Tomo LLC and published in Crain’s Chicago Business, measures the quality of patents held by Chicago area companies. TT also was included in last year’s inaugural index.
http://jlne.ws/YlXdnd

Events

TheStreetMONSTER Conference
June 7-8
Midtown Hilton New York
Join Jim Cramer, Jon (‘DRJ’) and Pete Najarian, and nearly a dozen more elite professionals at TheStreetMONSTER Investment Conference
http://jlne.ws/12WhIoV

BATS, Discover a better option to trade
Thursday, May 9
Webinar Hosts
Fraser Reid & Brian McAllister, Actant
Jeromee Johnson, BATS Options
Webinar Topics
     * Market Update
     * Making Markets Better, introducing the BATS Options member incentive programs
     * Actant Quote, Actant’s fast track pre-scripted market making solution
     * In pursuit of the perfect hedge, introducing Actant ExStream
     * Interactive Question and Answer Session
http://jlne.ws/12TJfIG

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