Lead Stories

Stock Market Fate In Fed’s Hands, At Mercy Of Earnings
JJ Kinahan – Forbes
Heading into a trading week packed with a pivotal Federal Reserve meeting and another flutter of earnings news, major stock averages have now retraced about half of the “panic selloff” that rocked a sleepy August.
The S&P 500 (SPX), pushed above 2070 on Friday, sits above its August 25 closing low, but is still 4.6% below its May 21 record high (figure 1). The drop in SPX has paired with a 41% drop over three months for the CBOE Volatility Index (VIX), one measure of broad-market jitters.

Gold rally brings out options bulls
Saqib Iqbal Ahmed – Reuters
With gold on track for its second-best month this year, traders in the options market are betting there is plenty of steam left in the rally.
Spot gold, which touched a five-year low of $1,077 an ounce in July, is up about 8 percent from then and broke through its 200-day moving average last week, the first time since May.

Chicago High-Speed Firms Battle Wall Street for Treasuries Sway
Susanne Walker Barton – Chicago Tribune
“It’s no secret that some Wall Street banks have been slower to invest in electronic market-making technology as fixed-income markets have become more electronic,” although a few are moving to close that gap, said Paul Hamill, global head of fixed-income, currencies and commodities in Chicago at Citadel Securities, which also makes markets for investors.
“There are a large number of firms in Chicago in the futures and options markets that already have technology in their DNA given the electronic nature of these markets,” he said.

Weekly Market Outlook – The Trend Is Your Friend
Price Headley – CBOE Options Hub
Despite the tepid start to the trading week last week, the bullish finished strong, taking all the major indices above some major technical resistance lines.
Granted, Friday’s bullish move was more than a little overheated, with the opening gaps leaving the market vulnerable to a pullback that may well serve to start a corrective move. But, it’s interesting that the market was able to muster that much bullish interest on what was (frankly) less than truly bullish prompt.

It Just Doesn’t Matter
This coming week will be an important test in this regard with options expiry approaching. With the strong performance in the larger equity complex last week as NYSE participants were getting squeezed, this week should see some consolidation anyway, but the tell for precious metals, and the trajectory of the Dow / XAU Ratio, is how much precious metal shares will give back if we do indeed witness such an occurrence.

Fed Meeting A Mid-Week Bump In Flurry Of Earnings News
Heading into a trading week packed with a pivotal Federal Reserve meeting and another flutter of earnings news, major stock averages have now retraced about half of the “panic selloff” that rocked a sleepy August.
The S&P 500 (SPX), pushed above 2070 on Friday, sits above its August 25 closing low, but is still 4.6% below its May 21 record high (figure 1). The drop in SPX has paired with a 41% drop over three months for the CBOE Volatility Index (VIX), one measure of broad-market jitters (figure 2).

Volatility, We Hardly Knew Ye
Seeking Alpha
Volatility has plummeted since its near term peak at the time of the last Employment Situation Report.
News of continued easy money policies in the EU and China coupled with surprisingly strong earnings from handful of key companies has sent stocks soaring.
The coming week’s FOMC Statement could send markets lower even if rates aren’t raised, if the statement’s wording makes note of improving economic conditions reflected in those earnings.


Intercontinental Exchange to Acquire Interactive Data Corporation from Silver Lake and Warburg Pincus in $5.2 Billion Cash and Stock Transaction
Press Release – ICE
Intercontinental Exchange (NYSE:ICE), the leading global network of exchanges and clearing houses, announced today that it has entered into a definitive agreement to acquire Interactive Data Corporation (“IDC”), a leading provider of financial market data, analytics and related trading solutions, from Silver Lake, the global leader in technology investing, and Warburg Pincus, a leading global private equity firm focused on growth investing. The acquisition is valued at approximately $5.2 billion, including $3.65 billion in cash and $1.55 billion in ICE common stock, and builds on ICE’s global market data growth strategy by expanding the markets served, adding technology platforms and increasing new data and valuation services. An investor call to review third quarter 2015 results and the transaction details will be held on Wednesday, October 28 at 8:30am ET. Details for the call are included at the end of this announcement.

CME drives options volume to electronic markets
Tom Polansek – Reuters
The percentage of options spread business traded electronically at CME Group Inc (CME.O) has grown to 42 percent this year from 10 percent in 2010, Derek Sammann, global head of commodities and options products, told the Reuters annual Commodities Summit.
CME has driven the increase through investment in technology to make it easier to trade options on its exchanges, Sammann said. Its success in this signals that the company, which owns the Chicago Board of Trade, New York Mercantile Exchange and other exchanges, is overcoming a hurdle to all-electronic markets.

Tanzania plans to launch derivatives trading for stocks, FX
Drazen Jorgic and Fumbuka Ng’wanakilala – Reuters
Tanzania plans to introduce derivatives trading on the Dar es Salaam Stock Exchange over the next few months, the bourse’s chief executive said, in a bid to deepen investor interest and modernise the fledgling bourse.

Regulation & Enforcement

U.S. to prosecute high-speed trader in first criminal spoofing trial
Sarah N. Lynch – Reuters
The U.S. government will square off in a Chicago courtroom on Monday against a high-frequency trader accused of using computer algorithms to move market prices, as prosecutors test their ability to enforce a new “anti-spoofing” law.

U.S Watchdog Warns of Binary Options Related Scams
Avi Mizrahi – Finance Magnates
The American Financial Industry Regulatory Authority (FINRA) issued a warning to the public today about the dangers of trading binary options with unregulated providers. It claims trading binary options can be an extremely risky proposition as they are all-or-nothing propositions which are made even riskier by fraudulent schemes, many of which originate outside the United States.


Euronext Adds to Derivatives Innovation
Euronext has started centrally clearing bilaterally negotiated derivatives so clients can use capital more efficiently as London Stock Exchange Group has announced the launch of an interest rates derivatives venture to take advantage of portfolio margining.
The pan-European exchange said in a statement today that it has launched AtomX so clients can customise options and futures which will be cleared through LCH Clearnet and can be netted against other Euronext derivatives positions.


Bearish Fears, Bullish Calls
Steven M. Sears – Barron’s
The options market is awash in fear. Investors are bearishly trading options on the Standard & Poor’s 500 index and CBOE Volatility Index. Trading patterns suggest investors are worried the stock market will sharply decline by January, regardless of what has recently happened.
The fear is so intense that selling just one S&P 500 index put with a below-market strike price would enable an investor to buy an extraordinary number of bullish calls. Such pricing emerges when investors are so terrified of a future event they will pay any price for protection. Puts increase in value when stock prices decline.

Trading the 200-Day Is Effective, But Not Perfect
Adam Warner – Schaeffer’s Investment Research
Investing in stocks only when an index is above its 200-day moving average is about the simplest rule around. In the SPDR S&P 500 ETF Trust (SPY), for instance, it keeps you long something like two-thirds of the time, and would have captured almost the entirety of the gains since inception in 1993.
But it’s also probably the slowest and most frustrating strategy around, if you’re inclined to pay attention to your portfolio in any meaningful way. I bring this up because Friday marked SPY’s first close above the 200-day since Aug. 19.

Know Your Options
Josh Charlson – MorningStar
Over the past couple of years, a slew of new mutual funds employing options-based equity strategies have entered the marketplace, and they often end up in the long-short equity Morningstar Category. These funds claim to offer some attractive features, including an additional stream of “income” wrung from the writing of put or call options, as well as the potential to hedge against stock market downturns. Though it is true that investors can benefit from these characteristics, it’s also true that options strategies come in a staggeringly complex range of combinations and correspondingly diverse outcomes. One should never assume that just because a fund touts its options prowess that the strategy will provide sure protection in a downturn; the devil is always in the details with these funds.


The VXX: It’s Not Quite What It Seems
The Motley Fool
You may know that the Barclays Bank PLC iPath S&P 500 VIX Short-Term Futures ETN (NYSEMKT:VXX) is a way to bet with your dollars on the direction of the market. Should you take that bet, though? Probably not, as the VXX is not quite what it seems, in several ways.

Types of Binary Options and How to Pick Them (Part 2)
Trading Short Term Options is similar to trading classic Binary Options. The difference is that those options expire at 30, 60, 120, 180 or 300 seconds from the initiation of a trade and the investment amounts range from 0.05 BTC to 2.5 BTC.
Short Term Binary Options are designed mainly for more aggressive traders. Those instruments provide instant profits and allow traders to take advantage of markets high volatility.

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