JLN Options: E*Trade Website Goes Down as Fed Comments Spur Volume Surge; What Options Tell us about the Men’s Wearhouse and Jos. A. Bank Battle; VIX IV Continues to Be Silly Cheap

Jan 9, 2014

Lead Stories

E*Trade Website Goes Down as Fed Comments Spur Volume Surge
Sam Mamudi – Bloomberg
Some E*Trade Financial Corp. (ETFC) customers were briefly unable to access their brokerage accounts today, locking them out of the market as comments from the Federal Reserve spurred a surge in trading.
http://jlne.ws/KEJ6TO

What Options Tell us about the Men’s Wearhouse and Jos. A. Bank Battle
Andrew Wilkinson – Wall Street Pit
In many merger or takeover tussles there is invariably a winner and a loser. Typically shares in the acquirer dip on assimilation concerns, while those in the target rise as its market cap reaches the deal price. Of course the disastrous 2001 marriage of Time Warner and AOL is an example of the exception that proves the rule!
http://jlne.ws/KEIf5z

VIX IV Continues to Be Silly Cheap
Mark Sebastian – The Options Insider
This can sometimes be equated to the market being  ‘complacent’ which to be honest, the market has been for the last year.  However, its been with good reason:  not much has happened.
http://jlne.ws/1a47PKR

The Spirit of 1976
Adam Warner – Schaeffer’s Investment Research
If you’ve traded/invested long enough, you’ve probably had one really great trade (and hopefully, a bunch of good ones).
Maybe you made a great decision … or, maybe you made a pretty good decision and got somewhat lucky. Or, maybe you got completely lucky. I know my “best” trade ever was total luck.
http://jlne.ws/KESQ0k

Tokyo Shares End Down On Options-Related Selling
Brad Frischkorn – The Wall Street Journal
Tokyo stocks fell sharply amid heavy trading Thursday, as selling before critical January options settlement drove the Nikkei Stock Average down for the third time in four days.
Major losers included shares heavily weighted in the major indexes, such as apparel retailer Fast Retailing, machinery maker Fanuc, and telecom concern KDDI. The trio lost 3.7%, 2.9% and 3.1% respectively.
http://jlne.ws/1a41xeu

Videocast: Big call spread in VIX
optionMONSTER
http://jlne.ws/1a46YKh

Exchanges

Euronext strengthens senior management team
Press Release (NYSE)
Euronext N.V., a wholly owned subsidiary of IntercontinentalExchange Group (NYSE: ICE), today announced a series of management changes that will support and strengthen development in Europe. The new senior management structure, according to Dominique Cerutti, Chief Executive of Euronext, “will accelerate our targeted growth opportunities in Europe by bringing outstanding additional talent to our leadership team as we address the rapidly changing and increasingly competitive global landscape.”
http://jlne.ws/KEKDtf

Binary Options Go West! NADEX Achieved Best Ever Results In 2013
Andrew Saks McLeod – Forex Magnates
The regulatory furor which surrounds the method by which OTC binary options products are sold in different jurisdictions has been a source of both bemusement and opportunity for many companies during 2013, with Japan having finalized its entire regulatory structure, requiring re-engineering of trading platforms intended for that particular market, and North America conducting a clampdown on firms soliciting OTC binary options in its territory…
According to NADEX, the exchange experienced a 106% increase in binary options and spread contracts traded year-over-year.
http://jlne.ws/1a46x2s

Regulation and Enforcement

Senate to quiz US regulators on Wall St commodity bets
Anna Louie Sussman – Reuters
A Senate panel will hold a hearing next week to question financial regulators over Wall Street’s role in physical commodity markets, drawing fresh attention to a controversy over the possible risks posed by the involvement of the largest U.S. investment banks.
http://jlne.ws/1a41Ky0
**If you let the 800 pound gorillas off their leash what do you expect will happen? -JB

US hedge fund industry pushing derivatives regulator to lift ad ban
Sarah N. Lynch – Reuters
The U.S. hedge fund industry is making a fresh lobbying push to convince the federal derivatives regulator to remove a hurdle that could prevent private funds from advertising to new investors through television, the Internet or other channels.
http://jlne.ws/KEEPzK
**Another reason (as if I needed one) to DVR everything and skip past the commercials. -JB

CFTC Said Ready to Push Interest-Rate Swaps to Trading Platforms
Silla Brush – Bloomberg
The Commodity Futures Trading Commission is poised to push interest-rate and credit swaps onto trading platforms designed to make prices more transparent and competitive.
The agency’s approval would follow a three-month review of plans to mandate that certain types of trades be conducted on swap execution facilities, or Sefs, including those owned by Javelin Capital Markets LLC and trueEX LLC. The change, required under the Dodd-Frank Act, could take place as soon as next month.
http://jlne.ws/1a43LdI

Technology

Financial firms seek startup solutions to trade better, faster
Sonali Basak – Chicago Tribune
Technology has already transformed financial trading, and emerging companies are still at work making options trading faster and more accessible than ever. With rising regulatory burdens, new technologies might make it safer to trade, too.
Options, largely traded on the Chicago Board Options Exchange, help traders secure the “option” to buy assets or commodities at future prices, which balances market risk by helping control prices overall.
You can already trade on apps. Is Google Glass next?
http://jlne.ws/1lY3KKF
**Options are “largely” traded on CBOE?  I’m sure the CBOE will be glad to hear it.  Also, cell phones at the dinner table are bad enough.  Google glass at the dinner table?  No thanks (and I am as big a gadget nerd as they come). -JB

NASDAQ OMX Announces a Change to FIX Protocol
Press Release (NASDAQ)
Starting March 3, 2014, The NASDAQ Stock Market® (NASDAQ®), NASDAQ OMX BXSM (BXSM) and NASDAQ OMX PSXSM (PSXSM) system will validate the sending time field (tag 52 and tag 122). The sending time MUST correspond to the current date. The system will reject any order messages received with a sending time other than the current date. The system had previously interpreted all orders as being entered on the day received.
http://jlne.ws/KELfPs

Strategy

Positioning for an oil surge with options
James Ramelli – Futures Magazine
With crude oil trading at its lowest levels since early December, traders are beginning to position themselves for 2014. Recent declines in oil prices were extended in yesterday’s trading session after the release of inventory numbers that showed a greater than expected increase in supplies as demand continued to slide.
http://jlne.ws/1a41sqV

Options Education

OIC Introduces the Industry’s Premier Options Education Program
Press Release (OIC)
Today OIC rolled out its new options education initiative, the Options Education Program. The Options Education Program brings together OIC’s full range of educational offerings and network of leading industry professionals to offer investors, whether novice or advanced, the best educational platform possible to learn about options for free.
http://jlne.ws/KELWIt
**The option industry’s commitment to education never ceases to amaze me.  I can think of no other financial industry group that does as well with education.  -JB

Covered Call or Short Put?
Russ Allen – The Options Insider
In my last two articles, I wrote about the equivalence between two popular option positions – the short put (with no stock position) versus the covered call (long stock and short call). Today we’ll finish that up and talk about out-of-the-ordinary situations.
http://jlne.ws/KENH8J

 

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