Big oil options trades revive speculation about producer hedging
Catherine Ngai – Reuters
Two big trades in oil options worth nearly $60 million last week boosted volatility in that market and revived speculation among traders that U.S. producers are placing hedges to guard against another price rout this fall.
Options Bears Take Fresh Stab at Biotech Amid Rally Topping 500%
Joseph Ciolli – Bloomberg
Knives are out again for biotechnology stocks amid a rally that has burned skeptics repeatedly for six years.
Demand for options tied to declines in an exchange-traded fund tracking the companies rose to the highest level in three years relative to bullish ones, according to data compiled by Bloomberg. The Nasdaq Biotechnology Index has risen 549 percent since March 2009, including a 3.8 percent advance last week.
Barclays Released Its Outlook for the Rest of 2015, and It’s not Good for U.S. Stocks
Julie Verhage – Bloomberg
Sorry, S&P 500, you’re just not going to have that great of a year. With a mere two percent gain year-to-date, analysts at Barclays don’t think things are about to heat up in the second half of 2015.
Greece crisis: Heavy put buying by FIIs hints market rally may not last
Ram Sahgal – Economic Times
The recent rally in the market might not sustain if the quantum of outstanding protection bought by foreign institutional investors (FIIs) is any indication.
Fears of a potential Greek exit from the Euro area and adverse political fallout from the Lalit Modi expose pushed the net outstanding purchases of index put options by FIIs to 11.01 lakh contracts on Tuesday — a quantity not seen during times of uncertainty in the past and probably around the highest ever.
Wild Chinese share swings have wider resonance
Ralph Atkins – Financial Times
For thrill and spills, you cannot beat Chinese share markets. Recent wild price swings on the Shanghai and Shenzhen bourses — and the fortunes being made, or lost, by individual retail investors — have made for gripping tales. They have raised fears of a highly-inflated equity bubble about to burst spectacularly. But how much should the rest of the world worry?
The answer, perhaps, is: more than might seem obvious at first. Such volatility cannot be dismissed simply as a local story without wider significance for global financial markets. Rather, it reinforces worries about China in a bumpy economic transition phase that threatens significant ripple effects in distant parts of the world. What happens in Chinese equities could quickly become much more important.
Reduced volatility brings energy hedging
Tory Enerson – Resource Investor
Another day, another deadline breached as the Greek scenario plays out. The creditors for Greece have submitted a counter proposal to the Greeks through the European Union and The International Monetary Fund (IMF) that is asking for further compromise from the troubled economy. It appears that nothing will be done this week as the hard default deadline looms next Tuesday. With Greece being such a small economy, the issue is really more symbolic than fundamental to the success of the EU.
As negotiations continue, the market remains at attention with every small development. What makes this Greek scenario different than the litany of previous crisis’s is the fact that the Greeks are now run be a more leftist government that has made some very significant promises of less austerity to its people in winning their trust and the seat at the head of the state just last year. The new regime may be more ready to ‘dig the heels in’ than previous government’s which could become problematic for the negotiations as well a possibly change the outcome. Stay tuned.
By the Numbers: Go Long On Top of VIX Blahs?
Adam Warner – Schaeffer’s Research
As I’m sure you know from watching financial TV, we’re in the midst of a boom in volatility, the likes of which we haven’t seen since…
OK, maybe not. I believe I’m mistaken. We’re on the cusp of a volatility boom! Same as it ever was.
Curse of Swiss Franc’s Rally Seen Extending Beyond Greek Endgame
Lukanyo Mnyanda – Bloomberg
It’s going to take more than a resolution of the Greek crisis to free Switzerland from an overvalued currency that’s pushing it toward a recession, according to Europe’s biggest bank.
HSBC Holdings Plc says investors seeking a haven from the faltering global recovery will keep being attracted by the relative stability of the franc, even if Greece pulls back from the brink of default. The franc is the best performing major currency against the euro this year, and options prices suggest traders expect a repeat performance in the second half.
Ex-CME director to launch market-maker
Alice Attwood – Futures & Options World
A new market-making firm is already looking to expand its product coverage into additional asset classes beyond its initial forward foreign exchange offering, according to its founder, a former director at CME.
Twos Tens will launch on July 1, offering a forward foreign exchange curve, after founder Malcolm Baker said he recognised a gap in the market for a centrally cleared, credit agnostic, transparent, anonymous and liquid FX curve.
CBOE, C2 and CFE Trading Schedule for the Independence Day Holiday
CBOE Holdings, Inc. today announced the following trading schedule for Chicago Board Options Exchange, C2 Options Exchange and CBOE Futures Exchange in observance of the Independence Day holiday
Interactive Data’s Consolidated Feed Powers Tradelegs’ Strategy Optimization Platform
Interactive Data, a leading provider of trusted information for over 10 million financial instruments, today announced that its Consolidated Feed will power Tradelegs’ advanced decision-support software, which is designed to help portfolio managers construct and optimize their trading strategies.
ICE Clear Singapore Announces First Three Clearing Members
Intercontinental Exchange, the leading global network of exchanges and clearing houses, today announced that KGI Ong Capital Pte. Ltd., Phillip Futures Pte Ltd and UOB Bullion and Futures Limited have been approved as the first three clearing members for ICE Clear Singapore. ICE Futures Singapore and ICE Clear Singapore have received all regulatory approvals from the Monetary Authority of Singapore.
BX Options, NOM, and PHLX Introduce Volume-Based and Multi-Trigger Rapid Fire
Pending SEC approval, BX Options, NOM, and PHLX will introduce Volume-Based and Multi-Trigger Rapid Fire functionality complementing the existing Risk Monitor Mechanism. The new functionality is anticipated to be made available as follows:
NOM: Monday, July 27, 2015
BX Options: Tuesday, August 11, 2015
PHLX: Monday, August 17, 2015
Osaka Exchange: Monthly Trading Summary Of Weekly Options
Osaka Exchange, Inc. announces monthly trading summary of Nikkei 225 Weekly Options which was introduced on May 25, 2015.
MIAX Options – July 1, 2015 Fee Changes
Effective July 1, 2015, pending SEC approval, the MIAX Options Fee Schedule will be amended.
Regulation & Enforcement
Derivatives clearing diverts capital from long-term investing
Jonathan Williams – I&PE
Mandating central clearing of derivatives trades would only serve to increase profits for clearinghouses and could increase risk, PensionsEurope has warned.
In a discussion paper on the Capital Markets Union (CMU), published to coincide with the industry group’s annual conference in Brussels, the association warned that a more coherent capital market could be undermined by regulatory requirements diverting funds away from investment opportunities.
Optiver pays $17m to settle oil manipulation suit
Philip Stafford – Financial Times
Optiver, one of the world’s largest high frequency traders, has finalised a $16.75m settlement with a group of investors over allegations it was part of an unlawful scheme to manipulate the oil futures market eight years ago.
Yay! The Sand Hill Exchange is back
Paul Murphy – Financial Times
Despite having been shuttered, brutally, a month ago by the SEC, a Silicon Valley start-up that tried to offer trading in derivatives linked to private SV companies like Uber and Snapchat is suddenly back in business. But there’s a catch.
The Alternative Income Strategy Buffett Used To Make $7.5 Million Instantly
You say you wouldn’t touch options with a 10-foot pole? You’re not alone.
In a recent survey, securities broker TD Ameritrade found that more than three-quarters of “buy-and-hold” investors have never bought or sold stock options.
Block Trades – One Bullish and One Bearish VIX Option Trade
Russell Rhoads – CBOE Options Hub
When I disagree with someone with respect to an outlook for the market or particular stock I with often use the phrase, “that’s what makes a market”. What I mean by that is it takes people with differing opinions to create a viable and tradeable market. As I was looking at the trading activity in the VIX option arena earlier this week I can across one bullish and one somewhat bearish trade that occurred on the same day. First I’ll take a quick look at the bullish trade.
Trading The VIX: I Want Volatility With My Volatility ETF
Investing in the VIX has long been a challenge for investors. Because direct investment is not possible for the average trader, an assortment of ETFs have been created to facilitate the process. The most popular of these is the iPath S&P 500 VIX Short-Term Futures ETN, although many others, including inverse and leveraged products, are also available. Unfortunately, these ETFs are all based on VIX futures contracts and inevitably underperform the VIX over the long term, making them exceptionally difficult investments. I was, therefore, very excited to learn that a new pair of VIX ETFs would be entering the marketplace in mid-May that were designed to track the spot price of the VIX and to avoid futures contracts. One, the AccuShares Spot CBOE VIX Up Shares ETF was designed to directly track the spot VIX, while the other, the AccuShares Spot CBOE VIX Down Class Shares ETF would trade inversely to the spot VIX. Could these be what volatility ETF investors have long been waiting for? It has now been one month since these new products began trading. This article analyzes the performances of VXUP and VXDN in their first month of trading, and compares them to the spot VIX and VXX.
First Week of August 21st Options Trading For Intercontinental Exchange (ICE)
Investors in Intercontinental Exchange Inc. saw new options become available this week, for the August 21st expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ICE options chain for the new August 21st contracts and identified one put and one call contract of particular interest