Lead Stories

India VIX Drops Amid Higher Futures Rollover Rate Before Expiry
Santanu Chakraborty – Bloomberg
India’s benchmark gauge of options fell for the first time in three days as stocks reversed direction to close at a record high before the expiration of monthly derivatives.
The India VIX, a measure of protection against market swings using options, fell 1.7 percent to 19.43, the most since Jan. 23. The CNX Nifty Index closed 0.4 percent higher at an all-time high, capping a 10th day of advances, after dropping 0.6 percent intraday.
http://jlne.ws/15Z01Me

Stocks are volatile but directionless
Lawrence G. McMillan – MarketWatch
One trademark of this market is that extreme intraday volatility is the name of the game. Another trademark of this market is that one day seemingly has little or no influence on the next.
http://jlne.ws/1BA1q6q

Hedge Funds Made Investors $1.5 Trillion in 10 Years, AIMA Says
Lindsay Fortado – Bloomberg
Hedge funds have made about $1.5 trillion for investors after management fees in the past 10 years, according to an industry lobby group seeking to counter criticism over performance and costs.
Those cumulative gains came “despite the performance losses of $306 billion in 2008, by far the industry’s worst year,” the Alternative Investment Management Association said in a paper aimed at encouraging pension-fund trustees to invest, citing data from Hedge Fund Research.
http://jlne.ws/1BA3gEu
***DA: Funny; the stock market had a similar return profile – a monster return despite an awful 2008. Who wants to pay 2-and-20 to underperform the S&P 500?

Lessons in Probability: A Post-Mortem on Apple Inc. (AAPL)
Adam Warner – Schaeffer’s Investment Research
In the middle of our semi-daily panics about Europe, someone decided to throw in an earnings season. When I think of it, I try to tweet out higher-profile earnings estimates. That is, estimates of the magnitude of the earnings move as suggested by the options volatility curve as calculated by ThinkorSwim.
http://jlne.ws/1KcajVY

Tesla Bears Rev Engine on Falling Oil, China Skepticism
Inyoung Hwang – Bloomberg
Slumping oil prices have restored Tesla Motors Inc.’s status as a favorite among short sellers and bearish options traders.
Speculation that a 58-percent plunge in West Texas Intermediate crude since June and competition from General Motors Co. will hurt demand have pushed short sales to a one-year high. The difference in the cost of bearish options versus bullish ones has almost quadrupled from September, reaching the highest level since November 2012, data compiled by Bloomberg show.
http://jlne.ws/1Kc3kMF

[Video] Worst-Case Scenario: Everything Can Go Wrong This Year
Bloomberg
This could be the year when a number of geopolitical tensions boil over. Which poses the greatest risk to investors? Bloomberg asked Eurasia Group President and political scientist Ian Bremmer how the year could unfold.
http://jlne.ws/1CDgotK
***DA: Everything? That covers a lot of ground.

Videocast: VIX action ‘wishy washy’
optionMONSTER
http://jlne.ws/1Kc1Ce8

An Investing Frankenstein
by Joshua M Brown
Patrick O’Shaughnessy attempts to combine all the key attributes in order to create a “Perfect Investor” in a new post at his site, Millennial Invest.
http://jlne.ws/15VaiIo

Exchanges

Exclusive – LSE to put Russell Investments up for sale for 923 million pounds
By Jessica Toonkel, Reuters
The London Stock Exchange Group Plc (LSE.L) plans to put Russell Investments up for sale in mid-February and hopes to fetch around $1.4 billion (923 million pounds) for the unit, two sources told Reuters Wednesday.
http://jlne.ws/1txFDfq

Jose Scheinkman to receive CME Group-MSRI Prize in Innovative Quantitative Applications

Press Release – CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, and the Mathematical Sciences Research Institute (MSRI) announced Jose Scheinkman, Professor of Economics at both Columbia and Princeton Universities, as the 2014 recipient of the CME Group-MSRI Prize in Innovative Quantitative Applications.  A ceremony honoring Scheinkman will take place at CME Group Headquarters on Monday, Feb. 9, at 10:00 a.m. CT and will feature a dynamic discussion on the topic of economic bubbles.
http://jlne.ws/cjpXe7

Ex-Goldman Sachs Trader Plans to Open New Bitcoin Derivatives Exchange LedgerX
George Krash – NEWSBTC
Federally regulated bitcoin exchanges seem to be becoming a trend. Paul Chou, a consultant and former Goldman Sachs trader is readying LedgerX Bitcoin derivatives exchange and clearing house.
http://jlne.ws/1DjNHke

Epic Battle for Control of GFI Comes to a Head Thursday at Midnight; GFI pushes ‘bird in hand’ theory; BGC pushes ‘we’ll pay more’ theory
By Kevin B. Sanders, Observer News
Anyone who’s read Barbarians at the Gate (or seen the underrated HBO movie version) knows that the most exciting thing that can happen in business is a bidding war for control of a company. And as with that book’s subject, RJR Nabisco, it’s double exciting when it’s an insider team vs an outsider team.
http://jlne.ws/1zFihHB

Fines, reforms force Deutsche Bank to face tough strategy choices
Business Recorder
Deutsche Bank will remember Thursday, January 8 as the start of “Duesselgate”, a nickname born not of wrongdoing, but from the shockwaves sent by a speech given in Germany’s former industrial heart. Co-Chief Executive Juergen Fitschen stood before some 450 staff and clients in Duesseldorf and wondered aloud whether the bank’s claim to a universal strategy would survive.
http://jlne.ws/1z6XmLw

BNY Mellon And State Street Collaborate With Eurex Clearing On Securities Lending CCP Solution
MondoVisione
Eurex Clearing, Europe’s leading clearing house and part of Deutsche Börse Group, today announced a collaboration with BNY Mellon and State Street, two of the world’s leading providers of financial services to institutional investors and two of the largest securities lending agents. The parties intend to work together strategically to further enhance the Eurex Clearing service to meet the specific needs of beneficial owners, as well as to explore expanding the geographic reach into the US. Additionally BNY Mellon and State Street will aim to provide access for their clients to the Eurex Clearing’s Lending CCP service.
http://jlne.ws/1zFinPk

Regulation and Enforcement

CFTC’s Giancarlo Calls U.S. Swap Rules ‘Fundamentally Flawed’
Silla Brush – Bloomberg
Wall Street has been hurt by U.S. Commodity Futures Trading Commission regulation of the $700 trillion swap market, and the agency should re-write policies adopted after the financial crisis, the panel’s Republican member said.
J. Christopher Giancarlo, a former executive at swaps brokerage GFI Group Inc., said in an 89-page paper that the agency’s regulations have shifted business overseas, made it more expensive to operate exchanges and will encourage high-speed trading that could have an unpredictable market impact.
http://jlne.ws/1CP6rtQ

Thomson Reuters rethinks FX speed bump
By Joel Clark, Financial News
Thomson Reuters may delay the introduction of a speed bump on its flagship foreign exchange matching platform, a concept employed by rivals such as IEX to curtail the advantage of high-frequency traders.
http://jlne.ws/1zgKIYR

Don’t Give up Your FINRA License
Wealth Management
Lately, registered representatives at FINRA registered broker dealer firms seem to be quickly heading for the doors to join RIA firms.
http://jlne.ws/1DjLBAM

Strategy

Trading the post-Fed spike in volatility—commentary
D. David Jilek – CNBC
The Federal Reserve’s commitment to normalization has important implications for investors. It may create a need to adjust strategic allocations to increase the likelihood of meeting long-term investing goals.
http://jlne.ws/1CDg8ei

Concurrent $VIX Spike Peak Buy Signals
Lawrence G. McMillan – Option Strategist
…An astute subscribers noticed that, last week, another $VIX “spike peak” buy signal was setting up. $VIX had risen more than 3.00 points, measured with closing prices, from Jan 9th to Jan 13th (two trading days later).  Moreover, $VIX then dropped sharply this past Monday, January 20th, triggering a second signal while the first one was still “open.”  
http://jlne.ws/1BAdaWD

S&P And VIX Forming Large Triangles
Alan Bradley – Investing.com
The market action in the past two weeks has been excessively choppy but there is a rhyme and reason to it as the S&P 500 and the VIX are both steadily constructing large symmetric triangle patterns on their daily charts.
http://jlne.ws/1Kc3VOk

Options Education

 

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