JLN Options: Record VIX Streak Shows Dash for Hedges Before Bernanke; Wall St turns positive after Fed announces tapering; The Real Cause of the Santa Claus Rally

Dec 18, 2013

Lead Stories

Record VIX Streak Shows Dash for Hedges Before Bernanke
Callie Bost, Lu Wang and Nikolaj Gammeltoft – Bloomberg
Traders are protecting against losses after the biggest rally for stocks this decade, pushing the VIX to a record-long streak of gains as the Federal Reserve considers reducing economic stimulus.
The Chicago Board Options Exchange Volatility Index has risen for 14 of the past 16 trading days, the first time that has ever happened, data compiled by Bloomberg show.

Wall St turns positive after Fed announces tapering
Ryan Vlastelica – Reuters
U.S. stocks rose in volatile trading on Wednesday after the Federal Reserve announced plans to trim its stimulus program, though it said its key interest rate would stay lower for even longer than previously promised.

Videocast: Lower volatility returns

The Real Cause of the Santa Claus Rally
J.W. Jones – MoneyShow.com
What many call the Santa Claus Rally may have more to do with triple witching than whether Wall Street was naughty or nice.
**Witching, Santa Claus, naughty or nice…beginning to wonder if Wall Street needs a Sanity Clause. -JB (hat tip to the Marx Brothers)

Biggest burden from Camp’s comprehensive tax review could fall on retail investors
Richard Jory – Risk Magazine
 After thinking they would be ignored in a broad reform of the US tax system led by David Camp, retail investors could find themselves in the firing line for phantom income tax, say bankers…
“Much concern has been raised over listed options and the effect the reform would have on those and related products. If phantom income tax and reporting are introduced, it would certainly have a negative impact on investors who use structured products in the US.”

High-Speed Trading, Interest Rates Pose Risks, Treasury Says
Kasia Klimasinska – Bloomberg
The U.S. financial system’s vulnerabilities include a sudden spike in interest rates amid greater risk-taking and high-frequency trading, the Treasury Department said.


IntercontinentalExchange Announces 2013 Achievements; NYSE Leads in Capital Raised, Total IPOs and Technology IPOs
Press Release (NYSE)
ntercontinentalExchange Group (NYSE: ICE), the leading global network of exchanges and clearing houses, today announced 2013 accomplishments, including the third consecutive year for NYSE’s leadership in global initial public offerings (IPOs) and capital raised.

CBOE Holdings Announces Date Of Fourth-Quarter 2013 Earnings Release And Conference Call
Press Release (CBOE)
CBOE Holdings, Inc. (NASDAQ: CBOE) will announce financial results for the fourth quarter of 2013 before the market opens on Friday, February 7, 2014.  A conference call with remarks by CBOE Holdings, Inc. senior management will begin at 7:30 a.m. Central Time.  A presentation will be referenced during the call and will be available on the Investor Relations section of our website at http://ir.cboe.com under Events and Presentations.
Date:  Friday, February 7, 2014
Time:  7:30 a.m. Central Time

Regulation and Enforcement

U.S. Regulators Working On Guidance to Clarify Volcker Rule’s CDO Provision
Ryan Tracy – The Wall Street Journal
One week after releasing the more than 900-page Volcker rule, U.S. banking regulators are considering issuing guidance to address concerns about the rule’s impact on some small and midsize banks, according to people familiar with the matter.

Maker-taker conflicts the tip of the iceberg
The Trade
Concerns about the potential for maker-taker pricing to distort market activity should be widened to consider a broader range of pricing issues, said industry experts following a report by the International Organization of Securities Commissions (IOSCO).

US and Europe lock horns on derivatives
Anish Puaar – Financial News
After five years of effort, reform of the over-the-counter derivatives market at last began to come into force this year – and the effect was almost exactly the opposite of what was intended.


OptionsCity Software Introduces New Global Hosting Infrastructure
Press Release (OptionsCity)
OptionsCity, a leading provider of electronic trading solutions for professional futures and options traders, today unveiled OptionsCity Hosting, a global hosting service.
OptionsCity Hosting gives clients hosted versions of Metro, the company’s flagship trading and risk management platform for professional traders and market-makers, and Freeway, its multi-asset automated trading solution. In addition, trading institutions can use this infrastructure to gain reliable, low-latency market access, while lowering operational costs. The company engaged in this initiative based on client need for a bundled solution for its software coupled with hosting to trade on exchanges, such as the CME, NYMEX, ICE, LIFFE, and EUREX.

Options Education

Putting Away Puts
Russ Allen – The Options Insider
Recently, the S&P 500 notched another record high. The new Fed chair has indicated that she’s ready to continue printing money until hell freezes over. No one knows how long the present rally will continue. The one thing we do know is that it will not be forever.



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