Lead Stories

Exchange Traded Derivatives Trading Volumes Recovered in 2013 According to the World Federation of Exchanges
WFE Press Release
LONDON — In 2013, the number of Exchange Traded Derivatives (ETD) worldwide increased by 3% to 22 billion contracts, according to statistics compiled by the World Federation of Exchanges (WFE).

VIX Futures Market COT Speculators add to bearish positions for 2nd week
CountingPips March 9, 2014
VIX Futures Contracts: Large traders and speculators raised their bearish bets in the VIX futures market last week for a second consecutive week, according to the latest data from the Commodity Futures Trading Commission (CFTC) released on Friday.

Ukrainian Impasse Propels Bullish Corn Trades to Record: Options
Russia’s incursion into Ukraine has led to record options trading in a security that tracks corn, reflecting concern that supplies from the third-largest exporter will be disrupted if tensions escalate.
Investors are piling into contracts on the Teucrium Corn Fund, which tracks U.S. prices for the grain used in everything from motor fuel to soft-drink sweetener. A record of more than 16,000 call options giving the right to buy the exchange-traded fund changed hands last week

VIX Continues To Plot The Ebb And Flow
Anna Coulling – Investing.com
It’s been an interesting few weeks for equity markets, with the usual crop of doom and gloom ‘experts’ emerging from the undergrowth to call the top of the market, before disappearing equally quickly, realizing that they were wrong…once again. When will they learn?

Uneasy rally in US stocks likely to continue
BusinessTimes Premium
Traders divided on impact of Ukrainian crisis, EM weakness on the US market
LAST week, US stocks finished near record highs as the initial shock of Russia’s invasion of the Crimea wore off; and this uneasy rally may continue this week.

The unbearable lightness of options
The Guardian
Wall Street wants you to buy options, which are like derivatives with training wheels – and dangerous when mishandled
Let’s be frank: there’s no such thing as an investment product that is absolutely safe. Not, that is, if you want to actually make money on your investment.  At the other extreme, there are products that add too much risk to our portfolios, even though they’re being offered to regular investors with no special expertise.
***SR: Indeed, not all strategies are for everyone, nor are options the same as a buy-and-hold strategy. And, yes, as is true with any investment or trading product, it is foolish to be involved in a complex or “sophisticated” strategy that you don’t understand well. Options are no different.

Volatility: Where We’re Headed Next
Adam Warner — Schaeffer’s Investment Research
Another week, another grind higher in the markets. It wasn’t without its form of excitement, though. We started out with a panic that Russia’s incursion into Crimea would lead us into World War III. Or, something like that. The worries lasted all of about a day, though, and by Tuesday we were making new highs again. And despite some chop, we closed higher each day.

Market: Volatility sets in; India VIX surges 4%
India VIX, a key measure of market’s expectation of volatility over the near term, surged over 4% to 17.4 levels.


TMX Group and China Financial Futures Exchange Sign Memorandum of Understanding
Press Release
China Financial Futures Exchange Incorporated (CFFEX) and TMX Group today announced the signing of a Memorandum of Understanding (MoU) to enhance their understanding of each others’ businesses and to evaluate further business opportunities. Hui Mei, Board Secretary of CFFEX and Brenda Hoffman, Chief Information Officer, Group Head of Technology, TMX Group participated in the signing ceremony.

Short Covering Boosts Large Speculators’ Gold Positions, CFTC Data Show; PGMs Also Gain
Kitco News
Short covering continues to be a factor in large speculators’ rising net-long gold futures and options positions at the Comex division of the New York Mercantile Exchange, according to the latest weekly commitments of traders data from the Commodity Futures Trading Commission for the week ended March 4.

Regulation and Enforcement

SEC Said to Probe Whether FX Rigging Distorted Options, ETFs
The U.S. Securities and Exchange Commission is investigating whether currency traders at the world’s biggest banks distorted prices for options and exchange- traded funds by rigging benchmark foreign-exchange rates, according to two people with knowledge of the matter.

Derivatives trade reporting rules suffer a rocky start
Liz Salecka – Financial News
The reporting of derivative trades under the European Market Infrastructure Regulation is proving anything but a clear-cut exercise and, as issues persist, many industry players believe it could take up to six months longer to get things right.

U.S. court ok’s part of DTCC lawsuit against CFTC
Aruna Viswanatha – Reuters
Parts of a lawsuit filed by the Depository Trust & Clearing Corp against the top U.S. derivatives regulator in a fight over swaps data will be allowed to proceed, a U.S. federal judge ruled.
The DTCC sued the Commodity Futures Trading Commission over the way it allowed DTCC rivals CME Group Inc and IntercontinentalExchange to gather potentially lucrative swap trading data.


OptionsCity Software’s Metro 5.0 Powers Traders into Global Markets
Press Release
Chicago, March 10, 2014 – OptionsCity Software, a global provider of electronic trading solutions for professional futures and options traders, today announced the release of Metro 5.0, a major update to its flagship trading and market-making platform. Metro 5.0 contains functionality and enhancements that allow traders and brokers to manage global risk and efficiently navigate electronic markets.
***SR: Look for an interview with OptionsCity’s CEO, Hazem Dawani, coming up soon in the Options Newsletter

Options Education

Book Review: Trading Options
Brenda Jubin – Investing.com
Greg Harmon’s Trading Options Using Technical Analysis to Design Winning Trades (Wiley, 2014) is a useful intermediate-level book. Although the author spends more than half the book on a survey of technical analysis, with special emphasis on price patterns, and a chapter on option basics, he assumes a modicum of familiarity with both, even if some readers may need a bit of remedial education…
Harmon’s directional technique is, of course, only one of many possible ways to trade options. But it’s a technique that all traders should understand before they decide on their own personal course.

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