Observations & Insight
Apps and Widgets Come to the Trading World
Sarah Rudolph, Managing Editor – JLN
Apps – short for software applications, of course, but also conveniently one syllable of the word “apple” – are a part of just about everyone’s life these days, and available from a variety of different places beyond just the Apple App Store.
They are also being utilized in the trading space, although so far only a couple of companies are offering them. One is OptionsCity, which on Wednesday launched the newest version of its Metro NOW platform, which among other things offers customizable widgets (a simple type of app) that customers can design themselves. Metro Now also has an app store called CityStore from which they can download off-the-shelf widgets.
According to Hazem Dawani, OptionsCity’s CEO, using these widgets “doesn’t require the customer to reinvent the wheel and rebuild all the core system functionality. Customers can quickly build the widgets that communicate with the market and analyze information, and they can build them within days rather than months or years.”
He said sophisticated users such as market makers have been building their own widgets from scratch, but now they are abandoning that model and looking for a hybrid way to build only the components they care about.
Options Traders Getting Paid Following Buffett to Kraft Takeover
Inyoung Hwang and Callie Bost – Bloomberg
Options traders had several companies to consider in trying to figure out what Warren Buffett would do next in the food industry. Overwhelmingly, they chose Kraft Foods Group Inc., and their bets are paying off.
Buffett’s plans were the subject of media and analyst speculation and there’s no evidence to ascribe illicit intent to anyone taking a flier on the deal. Data compiled by Bloomberg show that bullish options volume surged 85 percent in 2015 on Kraft, while falling in Kellogg Co. and Campbell Soup Co. On March 10, a block of 10,000 Kraft calls betting on an 8.6 percent jump to $67.50 by June 19 changed hands.
***DA: Coattail surfing on Buffett’s back is big business. But I would have thought when they started listing BRK-B that would have subsided.
FX options indicate big euro/dollar swings may pause
Recent sharp swings in the euro/dollar exchange rate have not been matched by moves in the currency options market, as a cautious outlook from the U.S. Federal Reserve pushes back expectations of when rates will rise.
The euro, which hit a 12-year low of $1.04570 the day before the Fed meeting began, jumped to a high of $1.10625 in the hours after Fed Chair Janet Yellen hinted on March 18 that interest rates would not be raised in a hurry.
***DA: I’ve been on the wrong side of that trade before – violent reversal of the trend followed by a vol squash.
VIX Should Drift Lower as Rate Hike Approaches, says RBC
Johanna Bennett – Barron’s
The Federal Reserve’s launch date for its first interest rate hike in a decade is a big focus for many investors. Despite the inevitability of higher rates, Wall Street’s fear gauge, the CBOE Volatility Index (VIX), has fallen since hitting a high of 22.39 in January.
Nevertheless, the common fear is that tighter monetary policy should result in a pickup in volatility.
***DA: Not today, though. Yemen bombing, plane crashes and general weakness took VIX above 17 this morning before settling down.
Suddenly, bonds don’t look so safe
Lawrence Lewitinn – CNBC
For the second straight day, investors seemed to dump their stocks in favor of just about anything else—except, unexpectedly, bonds.
All the major stock indexes—the S&P 500, the Dow Jones industrial average and the Nasdaq composite index—saw their third-straight trading day of selling on Wednesday. Meanwhile, gold climbed nearly 1 percent and the CBOE Volatility Index (the VIX) jumped nearly 2 points to 15.44.
Russell Investments boosts strategists informing the firm’s multi-asset portfolio management
Press Release – Russell Investments
Russell Investments has hired Paul Eitelman to serve a key role on its global team of investment strategists, whose research and views help guide the firm’s multi-asset portfolios and services for institutional and retail investors. Eitelman most recently served as vice president, senior economist at J.P. Morgan in New York.
Reporting to London-based Andrew Pease, global head of investment strategy, Eitelman joined Russell on March 23 in Russell’s Seattle headquarters.
NZX Expands Asset Suite With Exchange Traded Options
Jeff Patterson – Forex Magnates
The NZX is slated to launch a new equity options offering for market participants, following the approval of New Zealand’s Financial Markets Authority (FMA) – the exchange is targeting an April 24, 2015 launch date, according to an NZX statement.
The NZX Limited operates capital, risk and commodity markets in New Zealand, whilst providing information and data to help foster business decision-making – the NZX is the only registered securities exchange functioning in the country.
Regulation & Enforcement
U.S. SEC to propose registration rules for high-speed traders
Sarah N. Lynch – Reuters
Proprietary high-speed trading firms that execute trades on dark pools and other electronic platforms would be subject to greater regulatory oversight under a proposal unveiled on Wednesday by the U.S. Securities and Exchange Commission.
The plan, which is expected to be issued for public comment by the SEC, would require high-speed firms to register and become members of the Financial Industry Regulatory Authority (FINRA), Wall Street’s self-funded regulator.
***DA: For a full summary, links to related info and key dates, here is the page in MarketsReformWiki, hot off the presses.
House panel focuses on international market issues in reauthorizing CFTC
Sarah Gonzalez – AgriPulse
A House Agriculture subcommittee continued a series of hearings in advance of writing legislation to reauthorize the Commodity Futures Trading Commission (CFTC), which lapsed in September 2013, focusing today on complex rules for international markets.
Noting that derivatives markets have changed over the past five years in response to the passage of the Dodd-Frank Act of 2010, “the further into implementation we get, the more cross-border jurisdictional issues that seem to arise,” said Rep. Austin Scott, R-Ga., the chair of Commodity Exchanges, Energy, and Credit Subcommittee.
***DA: The clearing equivalence issue is going down to the wire – June 15. Terry Duffy was quite animated in his display of impatience, and rightly so.
Stock market rigging is no longer a ‘conspiracy theory’
John Crudele – New York Post
The stock market is rigged.
When I started making that claim years ago — and provided solid evidence — people scoffed. Some called it a conspiracy theory, tinfoil hats and that sort of stuff. Most people just ignored me.
But that’s not happening anymore. The dirty secret is out.
Correlation Station: The Strangle Debate
Adam Warner – Schaeffer’s Investment Research
With the market high (before yesterday, at least) and interest rates very low out to forever, there’s ample reason to seek out other avenues to get a decent return. Preferably one that’s non-correlated to equities.
So, in that vein, here’s an interesting idea: sell volatility!