CBOE Statement On Today’s Court Ruling In Favor Of CBOE In ISE Patent Litigation
Press Release (CBOE)
The Chicago Board Options Exchange, Incorporated (CBOE) announced today the United States Court of Appeals for the Federal Circuit ruled in its favor in a seven-year-old patent litigation with the International Securities Exchange (ISE), in which ISE claimed that CBOE’s Hybrid system infringed ISE’s patent for an automated exchange.
Technology Traders Hit Exit as Puts Trade Most Since Flash Crash
Joseph Ciolli, Callie Bost and Lu Wang – BloombergBusinessweek
Two weeks of selling in the Nasdaq 100 Index, where valuations are double the rest of the market, has sent anxiety among options traders to the highest levels since the flash crash four years ago.
An Options Perspective on US Interest Rate Scenarios
Blu Putnam – CME GROUP
Debates in the market place which are characterized by competing scenarios with widely divergent directional outcomes often spillover into heightened concerns about timing and volatility shifts. Since options come with welldefined exposures to timing (theta) and volatility (vega), they are a natural tool for the management of the risks associated with the different and changing probabilities one might attach to the competing scenarios. And, it can help focus the debate to frame the analysis in terms of an options pricing paradigm – direction, timing, and volatility.
BofA Trims Options Algo Suite
John D’Antona Jr. – Traders Magazine
Make it simple, stupid. That’s what Bank of America is doing to its options algorithm suite. The bulge firm, in response to its institutional clientele, has reduced the number of algos it’s offering clients to make trading easier and more efficient.
CBOE Set to Trade Weeklies
John D’Antona Jr. – Traders Magazine
The Chicago Board of Options Exchange has set an April 10 date for the trading of options with a weekly expiration date.
The short-term volatility indexed, or VIX options, or Short-Term Volatility Index contracts, will trade under the VXSTSM ticker beginning that Thursday, pending regulatory approval.
CBOE Bracketology – Biggest One-day Moves for VXST (up 81.7%) and GVZ (up 61.7%)
Matt Moran – CBOE
While many sports fans are bemoaning the fact that their NCAA basketball brackets have been demolished, options fans can always look to the CBOE for intriguing comparisons that can help hone their trading and investment strategies. Here is a newly constructed bracket that uses CBOE data.
Predicting the Next Great VIX Rally
Adam Warner – Schaeffer’s Investment Research
Another week, another churn to nowhere. I have to admit, though, Friday’s very ugly reversal and Nazz-inspired sell-off fooled me into thinking we had dipped on the week. I guess I’m getting old, I forgot we acted very well early on and actually hit all-time highs in the S&P 500 Index (SPX).
Videocast: Cheap protection in VIX
Large Speculators Cut Gold Net-Long Positions For Second Week – CFTC Data
Kitco News (via Forbes)
For the second week, large speculators cut their net-long gold futures and options positions at the Comex division of the New York Mercantile Exchange, following price weakness and possible positioning ahead of the March U.S. nonfarm payrolls report.
Beware New Lows In Option Volatilities
Kathy Lien – Investing.com
At the start of trading this week, option volatilities in the foreign exchange market have dropped to fresh multi-year lows. As shown in the charts below, the volatility of EUR/USD 1-month options has fallen to its lowest level since 2007 and for USD/JPY and GBP/USD, volatilities are at their lowest level since 2012.
Is Low Volatility Good for Carry?
Kathy Lien – BK Asset Management
The U.S. dollar traded lower against all of the major currencies today with the exception of the Australian dollar. While no major U.S. data is scheduled for release this week, the slide in Treasury yields and decline in U.S. equities discouraged investors from buying dollars. The FOMC minutes is the only notable event risk for the dollar and given that we already know where the central bank stands on monetary policy, the impact on the greenback should be limited. Therefore we take this opportunity to discuss the recent decline in forex option volatility and its implication for carry.
Fallout From High-Frequency Trading Hits Brokerages
Bradley Hope – The Wall Street Journal
Brokerages that cater to mom-and-pop investors are emerging as an early victim of the intensifying scrutiny of high-speed trading.
Shares of E*Trade Financial Corp., Charles Schwab Corp. and TD Ameritrade Holding Corp. tumbled last week amid concerns that regulators would ban a practice that allows brokerages to collect hundreds of millions of dollars a year in revenue by selling orders to middlemen who use high-frequency strategies to trade with the brokers’ customers.
Dark markets may be more harmful than high-frequency trading
John McCrank – Reuters
Fears that high-speed traders have been rigging the U.S. stock market went mainstream last week thanks to allegations in a book by financial author Michael Lewis, but there may be a more serious threat to investors: the increasing amount of trading that happens outside of exchanges.
Regulation and Enforcement
Traders Bilked Investors With Deceptive Tactics, SEC Says
Greg Farrell – Bloomberg
The U.S. Securities and Exchange Commission accused five New Jersey-based traders and their firms of reaping illegal profits from deceptive trading tactics known as “layering” or “spoofing.”
Playing a Market Near Its Highs
Steven M. Sears – Barron’s
U.S. investors now face pricey stocks and cloudy economic data. Here are options strategies on stocks and volatility to profit from the situation.
When Stocks Dither, ‘Buy Write’ and ‘Covered Call’ Funds May Deliver
Tom Lauricella – The Wall Street Journal
Stocks are off to a bumpy start in 2014, but there is one group of stock-fund managers who see a sideways market as their time to shine: managers who layer on options strategies as a way to earn extra investment income.
For the past couple of years, so-called buy-write and covered-call funds have been left in the dust by the big stock-market rally. That is because those options strategies limit potential gains in exchange for the income they generate.