JLN Options: With Ukraine in Turmoil, Volatility Equals Profits; Two Gauges Show Fear Is Front-Loaded; Volatility in Europe Surges Most Since Sovereign Crisis on Putin Paranoia

Mar 4, 2014

Lead Stories

With Ukraine in Turmoil, Volatility Equals Profits
By Steven M. Sears, Barrons
Shares of CBOE are up as volatility spikes. By selling puts against the stock, you can buy it for less.
When bad things happen to stocks, good things happen to options, and great things happen to the VIX. Remember that ripple effect, and try to profit from one of the market’s more constant patterns. When events threaten stock prices—such as Russian troops rolling into Ukraine—investor fear drives options prices higher.

Two Gauges Show Fear Is Front-Loaded
Short-Term VIX Rose Twice as Much as Regular Volatility Index
By Kaitlyn Kiernan
Investors are preparing for a rocky week ahead, but the stock market’s so-called fear gauge shows they don’t see volatility sticking around long.
The Chicago Board Options Exchange’s CBOE +2.24% Short-Term Volatility Index, which measures expectations for volatility over the next nine days, rose nearly twice as much Monday as the regular Volatility Index, the CBOE’s widely watched 30-day anxiety gauge.

Volatility in Europe Surges Most Since Sovereign Crisis on Putin Paranoia
By Inyoung Hwang and Nikolaj Gammeltoft
Not since Europe’s bull market began three years ago has volatility in its stock market risen as quickly as it did yesterday.
The VStoxx Index, based on the price of options protecting against Euro Stoxx 50 Index losses, jumped 30 percent yesterday for the biggest gain since the European debt crisis in August 2011, according to data compiled by Bloomberg.

S&P 500 Flattish As VIX Rises In 2014
The historical relationship between the SPDR S&P 500 ETF, or SPY, and the Chicago Board Options Exchange Volatility Index, or VIX, is more nuanced than one might anticipate.

ON THE MOVE: Hutchin Hill Nabs Barclays’ Credit Index Options Trader Sateesh
Phil Albinus, Traders Magazine Online News, March 4, 2014
Hutchin Hill Capital has hired Santosh Sateesh away from Barclays. Sateesh will trade options tied to credit derivatives indices for the $1.4 billion hedge fund.
According to news reports, Sateesh starts trading for HHC in April and will report to Hang-Bae Lee.


ISE Holdings Reports Business Activity for February 2014

BATS Global Markets Reports February Volume & Activity

BOX Price Improvement Activity for February

Average daily volume of 7.9 million contracts at Eurex Group in February
The international derivatives markets of Eurex Group recorded an average daily volume of 7.9 million contracts in February 2014, down from 8.7 million contracts in February 2013.

Nikkei 225 Futures Trading Fault Was Human Error: JPX
By Anna Kitanaka and Toshiro Hasegawa, Bloomberg
Nikkei 225 Stock Average futures and options contracts stopped trading in Osaka for more than 20 minutes today due to a “human operational error,” the derivatives bourse operator said.

February 2014 Options Marketshare by Exchange (via email from OCC)

February 2014 Total Options Marketshare:
AMEX-                 11.26%
BATS-                     3.53%
BOX-                       1.72%
CBOE-                   29.89%                                                           
C2-                          1.82%
GEM-                      2.53%
ISE-                        11.52%
MIAX-                     2.36%
NOBO-                    0.83%
NSDQ-                    8.91%
NYSE Arca-           11.09%
OMX PHLX-         14.53%

February 2013 Total Options Marketshare:
AMEX-                  13.47%
BATS-                      3.92%
BOX-                        2.16%
CBOE-                    23.39%
C2-                            1.56%
ISE-                          16.04%
MIAX-                      0.15%
NOBO-                     0.91%
NSDQ-                      7.08%
NYSE Arca-             12.36%
OMX PHLX-           18.95%
February 2014 Equity Options Marketshare:
AMEX-                  12.44%
BATS-                      3.97%   
BOX-                        1.93%
CBOE-                    21.69%
C2-                            2.03%
GEM-                        2.84%
ISE-                         12.91%
MIAX-                       2.65%
NOBO-                     0.93%
NSDQ-                     10.00%
NYSE Arca-           12.31%
OMX PHLX-          16.30%

February 2013 Equity Options Marketshare:
AMEX-                  14.73%
BATS-                      4.30%
BOX-                       2.37%
CBOE-                   16.48%
C2-                            1.69%
ISE-                        17.34%
MIAX-                     0.17%
NOBO-                    1.00%
NSDQ-                    7.76%
NYSE Arca-          13.49%
OMX PHLX-         20.66%



The ‘Race to Zero’ continues with faster hardware
Stephanie Hammer for FOW
Developments in hardware technology are helping traders shave off microseconds from their round-trip times. Many trading firms, banks and other market participants already utilise what’s commonly referred to as “hardware acceleration” to enhance their performance. However the combination of falling technology costs and intense competition is driving more companies to investigate.


Options strategies: A Swiss army knife of possible client solutions
As volatility increases, more investors are using new strategies to soften the potential drag on performance
By Brad Berggren, Investment News
Volatility in equity markets, whether increasing or simply uncertain, is becoming a more prominent factor in the decision-making process for many advisers and their clients. Volatility is a source of unpredictable risk.


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