JLN Options: Fear gauges fall back to pacified levels; Options Market Expecting Good News from Alibaba; Gold-Options Signal More Losses as Prices Slump to Four-Year Low

Nov 4, 2014

Observation and Insight

Patrick Birley, CEO of ISDX – Variety is the Spice of Life

“If you’re not happy with what you do, change. Do something else. Take the risk and get out there. “

Patrick Birley, CEO of ISDX, discusses his numerous career path transitions. Starting with an entrepreneurial experience for an exchange in Africa, Birley highlights the success he achieved and how he thought he would be unstoppable in his career. After a life changing event that forced him to reconsider the safety of his family, Birley returned with his family to the UK and ended up switching from several other corporate and entrepreneurial positions, until finally landing where he is today. In between those jobs, Birley became involved in the brewing industry before returning to the financial world. All these various experiences helped shape both Birley’s personality and professional attitude. His overall message is to take advantage of new opportunities and be willing to try something else if you don’t enjoy what you currently are doing.

Watch the video »

Lead Stories

Fear gauges fall back to pacified levels
Financial Times
Crisis over?
Global stock market volatility spiked last month as the Federal Reserve prepared to end its quantitative easing programme. But with the Bank of Japan stepping into the wild money printing breach, “fear gauges” have once again subsided.
***DA: Move along. Nothing to see here, folks.

Options Market Expecting Good News from Alibaba
Saumya Vaishampayan – WSJ
Alibaba Group Holding Ltd. is slated to release its first earnings report as a public company Tuesday morning and options traders seem to be expecting good news.
Trading in bullish call options across all expirations was elevated on Monday. Roughly 163,000 call options traded as of late afternoon, about 3 times higher than normal, according to Trade Alert.
***DA: A 7 percent move was priced in; the stock rallied 4 percent.

Gold-Options Signal More Losses as Prices Slump to Four-Year Low
Debarati Roy – Bloomberg
Investors are betting that the worst isn’t over for the gold market after prices fell to the lowest in more than four years.
The three most-traded options on the Comex in New York on Oct. 31 were wagers on more declines. Prices surged fivefold last week for a put giving owners the right to sell futures for December at $1,075 an ounce, a level that would mean a more than 7 percent drop from this year’s low.
***Deflation on the horizon, except in asset prices.

Record Index Options Volume in October Reflects Demand for Risk Management Tools
Matt Moran – CBOE Options Hub
In my discussions with institutional investors I often hear questions and comments about market liquidity and capacity, particularly in times of market volatility. To help answer these questions I often turn to data on contract volume, and I note that much of the volume for index options is related to portfolio or risk management strategies.
In October the average daily volume (ADV) numbers — (1) for S&P 500® (SPX) options rose to all-time record of 1,306,801 in Oct. (up 58% over the previous month), and (2) for VIX options rose to 852,402 (up 53% over previous month).
***DA Options help hedge price risk. If prices don’t move, there is no risk.

Are We at Risk of a Volatility Spiral?
Adam Warner – Schaeffer’s Investment Research
Are VelocityShares Daily Inverse Short-Term ETN (XIV) and ProShares Short VIX Short-Term Futures ETF (SVXY) your best bets to fade volatility?
Bets against volatility have soared recently. If the only thing to fear is the lack of fear itself, then maybe it’s time to worry.
***DA: Minsky logic: stability breeds instability.

India VIX Rises to 2-Week High as Rally Spurs Protection Demand
Santanu Chakraborty – Bloomberg
India’s benchmark gauge of protection against stock-market swings rose to a two-week high amid an advance in the CNX Nifty Index to an all-time high.
The India VIX Index jumped 3.3 percent to 13.7 in Mumbai, the highest level since Oct. 20. The Nifty added less than 0.1 percent to a record 8,324.15 at the close, after rallying for a sixth straight month in October.

Q&A with Steve Grob of Fidessa: Buyside Adapting Survival Strategies to Changes in OTC Derivative Market
Gregg Wirth – Traders Magazine
The massive regulatory changes in the OTC derivatives market-how the products are traded, cleared and accounted for-is forcing many large buyside institutions and trading desks that utilize OTC derivatives, like interest rate swaps, to change their behavior in ways both big and small to adjust to this new trading regime and the associated costs.
Traders spoke with Steve Grob, director of group strategy for Fidessa, a U.K.-based software and trading systems service provider, and asked him what he was seeing.


CME Group Volume Averaged a Record 17.6 Million Contracts per Day in October
Press Release – CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that October 2014 volume averaged a record 17.6 million contracts per day, up 58 percent from October 2013, and posted year-over-year growth in all six product lines.  Total volume for October 2014 was more than 404 million contracts, of which 87 percent was traded electronically, and a record 15.4 million contracts traded on CME Globex during the month.  CME Group open interest stands at approximately 104.9 million contracts at the end of the month, up 25 percent year-to-date.  
***DA: Volume up on chaos. Is there a contrarian play here?

New 20-Minute Binary Option Contracts
Press Release – Nadex
Nadex (the North American Derivatives Exchange) today announced the launch of 20-minute binary options contracts. These new short-term contracts come as a result of increasing demand for more intraday products that can be traded during the most popular trading times on the exchange.

BATS Global Markets Names Chris Concannon as President
Press Release – BATS
BATS Global Markets (BATS), a leading operator of securities markets in the U.S. and Europe, today named senior industry leader and market expert Chris Concannon as president, effective Dec. 15.
Mr. Concannon, who spent six years at Nasdaq as executive vice president, transaction services, will report directly to BATS CEO Joe Ratterman, who has led the firm since July 2007. He will be based in New York as part of the firm’s Executive Committee.
http://jlne.ws/1x1mbbp (PDF)

Intercontinental Exchange Announces March 2015 Launch of ICE Futures Singapore and ICE Clear Singapore
Press Release – Intercontinental Exchange
Intercontinental Exchange (NYSE: ICE), the leading global network of exchanges and clearing houses, today announced that operations at ICE Futures Singapore and ICE Clear Singapore are planned to commence on March 17, 2015.
Following the acquisition of the Singapore Mercantile Exchange and Singapore Mercantile Exchange Clearing Corporation in November 2013, ICE retained both licenses to operate as an approved exchange and an approved clearing house respectively. The listed and cleared products at ICE Futures Singapore and ICE Clear Singapore will be announced shortly, subject to final regulatory approval from the Monetary Authority of Singapore (MAS). In addition, leveraging ICE’s proven repository technology and to further support regional market participants, ICE Trade Vault, LLC has submitted a foreign trade repository application to the financial regulator of Singapore.

Intercontinental Exchange Reports Third Quarter 2014 Results
Press Release – Intercontinental Exchange
Intercontinental Exchange (NYSE: ICE), the leading global network of exchanges and clearing houses, today reported financial results for the third quarter of 2014. For the quarter ended September 30, 2014, consolidated net income attributable to ICE was $206 million on $745 million consolidated revenues less transaction-based expenses. On a GAAP basis, diluted earnings per share (EPS) in the third quarter were $1.80.
ICE’s operating results include acquisition and integration related expenses that are not indicative of the company’s core business performance. Excluding these items, net of tax, third quarter 2014 adjusted net income from continuing operations was $245 million and adjusted diluted EPS from continuing operations were $2.15. Adjusted figures exclude NYSE integration costs of $38 million and the related tax impact. Please refer to the reconciliation of non-GAAP financial measures included in this press release for more information on adjusted net income from continuing operations and adjusted diluted EPS from continuing operations.

Intercontinental Exchange Declares Quarterly Dividend of $0.65 Per Share
Press Release – Intercontinental Exchange
Intercontinental Exchange (NYSE: ICE), the leading global network of exchanges and clearing houses, announced today a $0.65 per share dividend for the fourth quarter of 2014. The dividend is payable on December 31, 2014 to shareholders of record as of December 16, 2014. The ex-dividend date will be December 12, 2014.


Press Release – CBOE
The Chicago Board Options Exchange (CBOE) today announced it has released its new state-of-the-art “CBOE Mobile” options application for iPhone and iPad users.
The new CBOE Mobile app features a variety of basic to advanced educational courses specifically developed for mobile application by The Options Institute, CBOE’s world-renowned educational arm.  CBOE’s latest educational tool includes 75 interactive lesson modules that encourage self-directed learning at a comfortable learning pace.  Additional features include trading tools and market data (including detailed price quotes, charts and options chains), accessibility to CBOE’s social media channels, and streaming video from CBOE TV. CBOE plans to regularly add more courses and lessons, including topics on CBOE volatility products, to the mobile app.

John Lothian Newsletter

We visit more than 100 websites daily for financial news (Would YOU do that?)

“John Lothian and Company… our industry intelligence.”

Rick Lane

CEO, Trading Technologies

Past Options Newsletters

Pin It on Pinterest

Share This Story