JLN Options: Options Trader Bets $16.6 Million on 9% S&P 500 Rally; Battered Volatility Trade Gets 1-for-4 Reverse Split Thursday

Nov 6, 2013

Lead Stories

Options Trader Bets $16.6 Million on 9% S&P 500 Rally
Nikolaj Gammeltoft – Bloomberg
An investor bought $16.6 million in call options on the Standard & Poor’s 500 Index, a strategy that will be profitable if the U.S. equity benchmark rallies in the next five months.

Battered Volatility Trade Gets 1-for-4 Reverse Split Thursday
Brendan Conway – Barron’s
The most heavily deployed of the market’s volatility-trading tools is set for a 1-for-4 reverse split after Thursday’s close.

WESTPAC: The Lack Of Volatility Could Be Signalling A Market Top
Greg McKenna – Business Insider
The S&P, Dow and the DAX all hit new all-time highs last week.
While fighting the Fed and its balance sheet has been a loser’s bet since 2009, there are strong signals in the options market that a top is at hand, according to the latest Westpac research from the FX Options team.

The Great Market of 2013
Adam Warner – Schaeffer’s Investment Research
We all know that 2013 has turned into one of the all-time great years in market history. But just how great? Well, here’s a pretty impressive stat via Joseph Quinlan, Chief Market Strategist at U.S. Trust, courtesy of Business Insider.

NYSE’s Next Owner Says Small U.S. Investors Get Ripped Off
Matthew Leising – Bloomberg
The head of IntercontinentalExchange Inc. (ICE), which is about to own the New York Stock Exchange, said U.S. equity markets are flawed because sophisticated traders are taking advantage of small investors.
**A fool and their money are soon parted. -JB

High Frequency Traders Are a Little Too Slow
Matt Levine – Bloomberg
High frequency trading is a wonderful subject for study because nobody agrees on what would make it Good or Bad. So academics and practitioners can write papers about how it is Good, or how it is Bad, and they don’t particularly contradict each other because they measure different things and the actual thing that one wants to measure is hard to nail down and would probably be hard to measure even if you knew what it was.

Videocast: Trades bet on lower VIX

Men vs. Women: Risk Aversion
One of the findings of the recent BlackRock Investor Pulse survey of 4,000 Americans , for instance, is that women are generally more risk averse than men when it comes to saving and investing.
**Risk aversion is not necessarily a bad thing.  Six times more men than women are struck by lightning every year (really).  Women, it would seem, know when to get out of the rain. -JB


CBOE to take time extending VIX options trading hours -CEO
Tom Polansek – Reuters
CBOE Holdings Inc will not rush to expand trading hours for options on the CBOE Volatility Index after implementing an extended trading schedule for futures in recent days, Chief Executive Officer Ed Tilly said on Tuesday.

CBOE Holdings Moves Up In Market Cap Rank, Passing Cliffs Natural Resources
Joel Kornblau – Forbes
In the latest look at stocks ordered by largest market capitalization, Russell 3000 component CBOE Holdings Incorporated (NASD: CBOE) was identified as having a larger market cap than the smaller end of the S&P 500, for example Cliffs Natural Resources, Inc. (NYSE: CLF), according to The Online Investor.

ICE Has ‘Informed View’ of How to Integrate NYSE, CEO Says
Matthew Leising – Bloomberg (via Traders Magazine)
IntercontinentalExchange Inc. is further along with its integration plan for NYSE Euronext than expected 10 months after announcing the $8.2 billion deal, according to Chief Executive Officer Jeff Sprecher.

ICE sees NYSE deal closing within days; profits rise
John McCrank – Reuters
IntercontinentalExchange Inc (ICE.N) said on Tuesday it expects to close its takeover of NYSE Euronext (NYX.N) within days, and reported an 8 percent rise in third-quarter profit, helped by lower taxes and new clearing revenues.

Regulation and Enforcement

Exclusive: EU to fine banks billions of euros over rate rigging
Foo Yun Chee – Reuters
A number of finance firms, including Royal Bank of Scotland and Rabobank face billions of euros in fines next month from European Union regulators for colluding on global benchmark interest rates, reinforcing Brussels’ hard line on the sector after the financial crisis.

CFTC’s Gensler Says LIBOR Is Based On Fiction, Not Fact
Greg MacSweeney – Wall Street & Technology
After praising the industry’s work to complete 65 final CFTC rules to implement Dodd-Frank, Gary Gensler takes aim at LIBOR and says the industry needs to change.

CFTC anti-speculation plan may not be so tough, data shows
Tom Polansek and Douwe Miedema – Reuters
A new plan to curb commodity speculation could prove to be far less rigorous than feared by markets, data provided by the world’s largest futures exchange the CME Group Inc showed.

Derivatives industry under the gun to amend contracts
Huw Jones – Reuters
Central bankers and regulators have increased the pressure on the $630 trillion derivatives industry to alter how it operates to avoid a repeat of the mayhem seen after Lehman Brothers collapsed.


OptionsCity connects to Eurex Exchange
Press Release (OptionsCity)
OptionsCity, a leading provider of electronic trading solutions, today announced its connectivity to Eurex Exchange, one of the world’s largest derivatives exchanges. Eurex Exchange lists some of the world’s most actively traded futures and options including European benchmark contracts like DAX Futures, EURO STOXX 50 Index Futures and Bund Futures. This news follows OptionsCity’s September 9th announcement that it was opening a new office in London to support expansion into the European market.

Trading Technologies to Establish Connection to NASDAQ OMX eSpeed
Press Release (TT)
Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, and NASDAQ OMX today announced that TT will introduce connectivity to NASDAQ OMX eSpeed in the first quarter of 2014. The eSpeed platform operates a fully executable central limit order book for electronic trading in benchmark U.S. Treasuries, one of the world’s largest and most liquid fixed-income cash markets.

Trading Technologies to Establish Connection to London Stock Exchange Group Derivatives Markets
Press Release (TT)
Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, today announced that TT will introduce connectivity to London Stock Exchange Group (LSEG) Derivatives Market in early 2014.

Trading Technologies and Ullink to Provide an Integrated Execution Management System and Order Management System (EMS/OMS) Solution
Press Release (TT)
Trading Technologies International, Inc. (TT) and Ullink, global providers of market leading connectivity and trading solutions for the financial community, today announced they have partnered to integrate Ullink’s order management system (OMS) with TT’s execution management system (EMS) software and application programming interface (API) solutions.


The Way We Were: Options Plays For After The Big Rally
JJ Kinahan – Forbes
Not only the title of a hit 1973 movie and Oscar winning Best Original Score song but, especially during earnings season, may be how you feel about a stock you are regularly following and once held as having great bullish potential.

How To Prepare For The Upcoming iPath VIX Futures ETN Reverse Split
Christopher F. Davis – Seeking Alpha
The bull market continues to power every higher. People are celebrating some huge gains in a few short years. Others, who have bet against the market or tried to play volatility have lost their shirts. As such, iPath, which offers a variety of ETNs, announced October 25, 2013 that it is going to conduct a reverse share split on the iPath S&P 500 Short Term VIX Futures ETN (VXX).


OIC Announces ‘Road To Wall Street’ Returns to the Stuart School of Business at IIT
Press Release (OIC)
The Options Industry Council (OIC) announced today that the next event in its university outreach program, The Road to Wall Street: Analyze Your Options, will be at the Stuart School of Business at the Illinois Institute of Technology (IIT) in Chicago for college students and faculty from IIT as well as the Chicagoland area on Friday, November 15.

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