First Read

OptionsCity CEO Hazem Dawani Talks Technology
By Sarah Rudolph – John Lothian News

OptionsCity on Monday announced the release of Metro 5.0, the most recent update to its flagship trading and market-making platform.

Last week OptionsCity’s president and CEO Hazem Dawani spoke with JLN’s Sarah Rudolph on the new version of Metro and what’s going on in technology in the options industry.

Q: OptionsCity just rolled out a new version of its Metro trading system. Can you tell me how it has changed to accommodate the changing needs in the marketplace?

A:  Version 5.0 is the result of a lot of work in the past 6-9 months. We worked on enhancing multiple areas. There is more emphasis on risk management: we have added a risk tool designed for global risk managers who manage multiple trading desks across many geographic areas. It allows them to view the different components of risk.

Read More >>> http://jlne.ws/1g61v42

Lead Stories

GLD Vol Starting to Get Dirt Cheap Again
Mark Sebastian in Options Insider
A while back when GLD was trading between 165-175 the IV of the options started to get silly cheap.  The GVZ which is the VIX of GLD options go to the point where it made almost no sense to sell options. 
http://jlne.ws/1g64Q2Z

TABB Group Report: Options on Futures Trading Grew 27% in 2013
The Options Insider
A new TABB Group research report has been released with the latest topic, “Options on Futures: A Market Primed for Further Expansion.”  This disclosed that options on futures trading volume is expected to remain strong this year, expanding 15%, as fiscal policy shifts and greater volatility drives market activity.
http://jlne.ws/1g6cVov

‘Smart Beta’: Watch Out for Bandwagoners, ‘False Alpha’ … and Yourself
Brendan Conway – Barron’s
Dave Nadig at ETF.com has a very good read this afternoon on the various ways investors can go wrong with “smart beta” exchange-traded funds. These ETFs go beyond standard indexing in pursuit of goals such as lower stock-market volatility or steady dividend income — meaning they’re helpful additions to the investor toolbox.
But it may be even easier than in conventional options to screw things up.
http://jlne.ws/1g6ei6w

Inquiries to Change Dynamics of Currency Trading
By SWAHA PATTANAIK
Around the world, investigators are trying to find out if the largely unregulated foreign exchange market was manipulated…  Three-quarters of global foreign exchange trading volume is already processed electronically, according to financial research firm Greenwich Associates. It is 28 percent for the currency options part of the market. Because banks get higher margins on options than on spot trading, foreign exchange profits will be squeezed if “electronification” makes inroads in that part of the market.
http://jlne.ws/1giA4s6

An Update on the Buffett Put Trade
Russell Rhoads – CBOE
If you notice this sounds familiar that is because portions of this blog appeared in this space in November of last year.  I dug through the Berkshire annual report and have updated the status of this running trade through the end of 2013.  As expected the short equity put trade is doing much better as global equity markets continued to trade higher into the end of 2013.  At the end of the third quarter the S&P 500 was at 1690 and it ended 2013 at 1846.
http://jlne.ws/1g6cqKX

Traders turn to swap alternatives as regulation bites
Anish Puaar and Tim Cave
11 Mar 2014
Around a third of firms trading over-the-counter derivatives will direct more business to exchange-traded futures markets as traders get to grips with changes to the swap market, according to a UBS survey.
http://jlne.ws/1giApLu

Study finds post-trade flaws in cleared derivatives market
FTSE Global Markets
The push toward an exchange-traded derivatives market has exposed gaps in the post-trade process used by market participants to clear and settle these transactions, according to new research from Greenwich Associates.
http://jlne.ws/1g6bZQU

Why Options (and Options Traders) are Good for the Market
James DiGeorgia – Uncommon Wisdom
“James, I’ve been following your recommendations the last several months, and I’ve noticed you use options strategies quite often. I’ve always thought buying and selling options amounted to pure gambling. So tell me … are options good for the financial markets?”
http://jlne.ws/1g6dGO6

Videocast: Rolling VIX spreads
optionMONSTER
http://jlne.ws/1g6eQt6

High-Speed Trading Firm Virtu Seeks $100 Million in IPO
Goldman Sachs, J.P. Morgan, Sandler O’Neill Are Leading Underwriters
Bradley Hope And Telis Demos, The Wall Street Journal
Virtu Financial Inc., one of the largest high-frequency trading firms, is seeking to raise $100 million in a public offering of its stock, according to a securities filing.
Virtu is a major player in some 200 global markets, trading in stocks, currencies, futures and others assets. It is majority-owned by Vincent Viola, a former chairman of the New York Mercantile Exchange and owner of the Florida Panthers professional hockey team.
http://jlne.ws/1g6a8eP

Welcome to Fund Management: My First Really Dumb Trade
David Sable – Forbes
The trading desk where I started at Deutsche Bank’s 280 Park Avenue building (aka “The Old Banker’s Trust Building” aka “The Building with the Starbuck’s in the Lobby”) was a pretty quiet place, and on the Friday before Memorial Day 2004 it was quieter than usual. No phones rang. Half hours passed with no words spoken. Except for the occasional “THWACK” of the big green key on one of the Bloomberg keyboards as one of us entered a trade, the room was completely silent.
The options trader and the volatility trader were the only occupants of the ten seats on our row of ten terminals other than me.
http://jlne.ws/1g6e4w7

Exchanges

CME Group Receives Regulatory Approval for Launch of its European Exchange
Press Release
CME Group, the world’s leading and most diverse derivatives marketplace, announced today it has received approval from the United Kingdom’s Financial Conduct Authority (FCA) for a London-based derivatives exchange. CME Europe Ltd will be a Recognised Investment Exchange and will launch on 27 April.
http://jlne.ws/1g63LIw

Nasdaq OMX considers expanding into foreign exchange
Clare Hutchison – Reuters
Exchange operator Nasdaq OMX Group Inc (NDAQ.O) is considering a move to offer trading and clearing of foreign exchange, as investigations into alleged currency market manipulation boost interest in easier-to-regulate trading via exchanges, one of its executive vice presidents said.
http://jlne.ws/1g6b5E0

Technical issue stops trading on NYSE Euronext bourse for 1 hour
Reuters
Trade on the NYSE Euronext pan-European stock market was suspended for nearly an hour on Tuesday because of a technical problem that forced traders to place orders offline.
http://jlne.ws/1g6bpCM

Regulation and Enforcement

NYSE, Nasdaq Join to Push for Trading Rule
Bradley Hope – The Wall Street Journal
Longtime rivals Nasdaq OMX Group Inc. NDAQ -1.79% and NYSE Euronext are joining forces in a bid to reclaim trading volumes from smaller competitors, according to people familiar with the matter.
The two firms are pushing for a controversial rule to be added to a pilot program under consideration by the Securities and Exchange Commission to widen tick sizes, or the increments between price quotes, for certain companies.
http://jlne.ws/PpSHB3

Technology

tradeMONSTER Launches Integrated Futures
CHICAGO, IL and BOCA RATON, FL, March 11, 2013 – tradeMONSTER, a leading online brokerage that delivers a state-of-the-art trading platform through a uniquely intuitive interface, today announced the addition of futures trading. With its seamless integration into the tradeMONSTER platform alongside stock and options trading, customers can now employ the full range of available tools to obtain risk and performance analysis on an aggregate portfolio, and better manage their trades and investments as a whole.
http://jlne.ws/1giBS4n

Strategy

Binary Events And Volatility
Benzinga
A trader facing a binary event — such as an earnings date on a stock they are interested in, or FDA approval on a biotech stock — may want to shy away from that event.  
Coupled with short-term Implied Volatility (IV) a trader may still be able to make a successful trade and have the results next morning.  Anyone buying options, calls or puts may see a particular stock move in their favor and still realize a loss — as the IV is pulled out of those option premiums, the event is over and the news is out. IV is sucked out of the premiums like air out of a balloon.
http://jlne.ws/1g6d3UT

Options Education

World-Renowned Options Trader to Offer Online Options Trading Course
Press Release
Andrew Keene, Founder of KeeneOnTheMarket.com, to Reveal Proven Techniques for Options Trading During Weekly Complimentary Options Education Course, “Options 101 Webinar Series”
http://jlne.ws/1g6di2e

 

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