Lead Stories

Spiking vol drives options activity
International Financing Review
Last month’s hawkish language from Fed chair Janet Yellen, which was accompanied by a jump in volatility, triggered an uptick in US options trading volumes for March, cementing the first quarter of 2014 as the busiest in three years for listed options trading.

Are VIX Futures Signaling a Vol Smack?
Andrew Giovinazzi – The Options Insider
A topic that is consuming the Pro Chat group at Option Pit has been the relative stickiness of the VXX lately.  There was finally a break in the product over the past few days, but for the most part VXX has decayed much less than expected so far this year.  I won’t trouble you with the whys, but much has to do with how the VIX futures are acting. They just don’t decay like they used to.

Options trading on Kellogg soars nearly 34 times average
Options activity in Kellogg Company (K.N) soared on Thursday, with total call and put volume nearly 34 times the recent average daily.

VIX Plunges to Lowest Reading Since January
Chris Dieterich – The Wall Street Journal
After a making a brief appearance, fear has left the building.
The CBOE Volatility Index, known as the market’s fear gauge, fell to 2 1/2-month lows on Friday, readings that strategists say that could coincide with a continued steady grind higher in stocks.

Videocast: VIX futures pop back

SPY, VIX, and the Most Boring Quarter Ever
Adam Warner – Schaeffer’s Investment Research
Now that the Most Boring Quarter Ever has officially hit the history books, I wanted to see how it looked compared to other first quarters over the past decade. So away we go… Here’s a comparison of percentage moves in the SPDR S&P 500 ETF Trust (SPY) vs. how the SPY did for the balance of the calendar year. Also, I included the quarterly close in the CBOE Volatility Index (VIX).

Losses in ‘Momentum’ Stocks Are Snowballing
Chris Dieterich – The Wall Street Journal
The Dow Jones Industrial Average is just a whisper below its all-time high, but tension is mounting as fast-money continues to flee so-called momentum stocks.
Losses to the market’s frothiest sectors snowballed on Friday, with stocks that had recently coasted on big gains in a tailspin. The tech-heavy Nasdaq Composite Index, which is down 2.4% on Friday, while Dow Jones Industrial Average is off 0.6%.

Analysis: Could The ECB Become The Same FX Volatility Factor in 2014, That The BoJ Was Last Year?
Victor Golovtchenko – Forex Magnates
In a press conference after the latest meeting of the European Central Bank’s (ECB) Governing Council, the ECB’s President Mario Draghi, has outlined that Quantitative Easing (QE) options have been discussed at the meeting. Markets have been caught wrong-footed, as not many players have been expecting this monetary policy tool to have been talked about at the meeting.

The future of ETFs
Yves Rebetez – Financial Post
Mary Anne Wiley has been leading Canada iShares since taking over from Som Seif two years ago, and oversees the country’s largest family of exchange traded products. But she’s been with the parent company or predecessor companies since 1997, closely watching how the ETF industry has evolved over the years. Here, she shares her thoughts on the future of the industry and how ETFs are helping investors.

Vanguard Says Minority of High-Speed Traders May Abuse
Christopher Condon – BloombergBusinessweek
Vanguard Group Inc., the world’s largest mutual-fund company, said only a minority of high-frequency traders may be hurting other investors.
Regulators should seek ways to prevent abuses without blocking high-speed firms that may actually benefit investors by providing liquidity to the markets, Joe Brennan, global head of Vanguard’s equity investment group, said in a telephone interview.

MF Global Starts Final Repayments of 100% of Customer Claims
Tiffany Kary – BloombergBusinessweek
MF Global Inc., the defunct brokerage once led by Jon Corzine, will begin final distributions to fully satisfy $6.7 billion in claims from former customers, starting tomorrow and lasting several weeks, the trustee overseeing the repayments said.


BATS Forced to Correct Statements by President O’Brien on How Its Exchanges Work
Scott Patterson – The Wall Street Journal
BATS Global Markets Inc., under pressure from the New York Attorney General’s office, corrected statements made by a senior executive during a televised interview this week about how its exchanges work.

New rules help stock exchanges fight back against “dark pools”
Alistair Smout and Clare Hutchison – Reuters
The European Union’s plan to cap the number of shares that can be traded anonymously could give traditional stock exchanges such as Deutsche Boerse and the London Stock Exchange the chance to win back some of the ground they have lost to new rivals.

Regulation and Enforcement

Energy firms beg CFTC for clarity on commodity options
Alexander Osipovich – Risk Magazine
Utilities, oil producers and trading firms are urging the CFTC to issue clarification on contracts with embedded volumetric optionality.
On April 3, officials with the US Commodity Futures Trading Commission (CFTC) got an earful from energy firms upset about a much-criticised CFTC rule that has sown confusion and disarray among natural gas and power traders.

CFTC Chief Says High-Speed Traders Aren’t Rigging Futures
Silla Brush – Bloomberg
The U.S. Commodity Futures Trading Commission is reviewing futures markets to ensure high-speed trading isn’t violating the law, acting CFTC Chairman Mark P. Wetjen told reporters in Washington today.


Don’t Reach For Yield – Take the Easy Dividends and Option Premium
L. Todd Wood – Fox Business
Yield oriented investors have had a tough time since the financial crisis in 2008.  The old adage, “Don’t fight the Fed,” has rung true as the central bank intervened in the bond market to keep interest rates artificially low. In order to prop up the economy and allow the United States to service its skyrocketing sovereign debt, the Fed has been actively buying U.S. Treasuries and mortgage bonds, ballooning its balance sheet and destroying savings rates for investors.

Option play in gold
Matt McKinney – Futures
Gold (COMEX:GCK14) prices are right were I want them now and this article will explain why I like to sell call options in downward trending markets on up days. Fundamentally, every time the economy here in the U.S. starts to take strides forward it seems as though gold prices start to move lower. Does that explain why the market has fallen about $115/ounce in about 14 trading days?

Options Education

Different Option Strategies on AAPL
Dan Passarelli – The Options Insider
Compared to trading stocks, there are so many more strategies available to an option trader. But more importantly: Do you know why there are so many different types of options strategies? This is the real reason of our discussion and why getting a proper options education can help a trader better understand all of those strategies and when and how to use them.

How The Markets Work It Off
Brandon Wendell – The Options Insider
No, this is not an article about weight loss!  It is more about preventing financial loss.  As traders we often rely on technical indicators for signals to help identify turning points in the prices of both the markets and our stocks.  In fact, many people rely on them as the basis for their software to tell them when to buy or sell.  There is a major problem with trading in only this manner.

FX Trading Mind-Set 101
Sam Evans – The Options Insider
As many of my regular readers will already be aware of, I am especially passionate about the Psychological aspects of trading and the inner mental game which active traders and to some degree longer-term investors, have to deal with on a regular basis. Students and traders alike have asked me time and time again, as to why we all tend to find trading so challenging.


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