Lead Stories

VIX Calls Rise to Record as Investors Bet on Bigger Stock Swings
Nikolaj Gammeltoft and Lu Wang – Bloomberg
Wagers that the VIX (VIX) will increase reached an all-time high as investors prepare for U.S. stock volatility with the beginning of the earnings reporting season.

Options Traders Take Bearish Stance
Kaitlyn Kiernan – The Wall Street Journal
Stocks have been off to a slow start this year and some options traders don’t see the market gaining traction any time soon.

European equity options traders eye Q1 fall then later rally
Sudip Kar-Gupta – Reuters
Expectations of solid gains for European equities this year mask a growing rush of bets on a weak first quarter, with investors piling into the options market to protect themselves.
Goldman Sachs warned this week of the risk of a 10 percent pull-back at some point this year in U.S stocks, which have already hit record highs.

Videocast: Surge of action in the VIX

What’s Wrong With This VIX-Ture?
Adam Warner – Schaeffer’s Investment Research
As you hopefully know, the CBOE Volatility Index (INDEXCBOE:VIX) proxies the implied volatility of a 30-day, at-the-money option on the S&P 500 Index (SPX). Since there’s generally not an option class that has exactly 30 days until expiration, the calculation of the VIX uses two distinct option expirations in the SPX, and applies a formula to create a hypothetical, 30-day SPX option.

VIX Study: Volatility Index Subdued But Investors Remain Skittish
The CBOE Volatility Index (VIX), also known as the Fear Index, is the key measure of market expectations of 30 day volatility of the S&P 500 stock index option prices.  In 2013, the VIX was a great indicator of short-term fear. This created many great opportunities to put capital to work. In this vein, it is also amazing how quickly fear returns to the markets with each pullback.

Goldman’s commodity trade ‘too important’ to quit: CFO
Anna Louie Sussman – Reuters
Goldman Sachs Group Inc (GS.N) reaffirmed its intent to remain in the commodities trading business, deeming it “too important” to clients to exit, a top executive said on Thursday.

IPO Fund Lures Record Money in Best Year Since 1999
Alexis Xydias – Bloomberg
The best year for U.S. initial public offerings since the 1999 technology boom is driving record money into an exchange-traded fund that invests in newly listed companies from Twitter Inc. to General Motors Co. (GM)


World Federation of Exchanges Moves to London
Waters Technology
The World Federation of Exchanges (WFE), the trade association of 62 publicly regulated stock, futures and options exchanges, has moved its headquarters from Paris to London.

CME Group Inc. will not be harmed by a lawsuit by three of its members, experts say
Annabelle Ju – Medill Reports Chicago
CME Group Inc. will not be negatively affected by a lawsuit filed against the company charging breach of membership contract.
That was the view of some who have reviewed the case, now being tried in Cook County Circuit Court.

New for Traders: ICE takes over Libor administration
Michael McFarlin – Futures Magazine
IntercontinentalExchange Group announced that ICE Benchmark Administration (IBA) will officially take over as the new administrator of the London Interbank Offered Rate (LIBOR) from Feb. 1, 2014. Today the Financial Conduct Authority (FCA) confirmed formal authorization to IBA to administer LIBOR effective Feb. 1, 2014.

Regulation and Enforcement

Exclusive: SEC may seek more power to enforce Volcker rule
Sarah N. Lynch – Reuters
U.S. securities regulators fear they do not have the full range of enforcement powers to police Wall Street’s compliance with the controversial Volcker rule, and told Reuters they are considering new rules to fill the gap.

Budget Woes Leave U.S. Swaps Agency Outgunned by Wall Street
Robert Schmidt and Silla Brush – Bloomberg
When President Barack Obama gave federal workers a 1 percent pay raise at the start of the year, employees at the U.S. Commodity Futures Trading Commission assumed they’d get the boost. They didn’t.
**It is often said on Wall Street that they do not need new regulations but rather to have current regulations enforced yet it seems every effort is made to hamstring the regulators from actually enforcing the rules. -JB


Would I Initiate an Iron Condor Trade with VIX at 12?
Dan Sheridan – CBOE
Answer is yes!
The question posed in the title implies that you might trade Iron Condors some months and possibly not others.  Maybe when the implied Volatility is up a bit you will sell the Iron Condor, but when it’s  low you won’t. That’s what Volatility Trading is all about, selling high volatility and buying low volatility. Though in the last few years, option volatilities have basically been low consistently.

How Do You Trade the Vix in Low Volatility? [Video]
Bloomberg TV
Group One Trading’s Michael Palmer discusses how to trade the vix when there isn’t a lot of fear in the markets with Julie Hyman in “On The Markets” on Bloomberg Television’s “Street Smart.”

A Review Of The Successful Strangle On The U.S. Unemployment and NFP Report Using Nadex Binaries
On January 10, I wrote how to trade the U.S. unemployment and NFP report by doing a strangle with Nadex binaries.
To summarize, the article stated the EUR/USD usually moves about 100 pips from high to low after the NFP release. It also said to look at 10, 11, or 3 PM binaries that were out of the money with low risk and no stop loss needed, as all risk is capped on the U.S.-based and CFTC regulated Nadex Exchanges binary contracts.

Options Education

Stops on Options Positions
Russ Allen – The Options Insider
When we trade stocks, or futures or Forex contracts, we always need a plan for each trade. It includes an entry price, as well as a plan for how we will exit the trade. The exits include one or more profit targets, as well as a stop loss. In our trading classes we use the acronym SET, which stands for Stop, Entry and Target.


Webinar #11: How to Generate Income or Buy Stock With Put Options
Options are versatile products. While they can be instruments to hedge against market risk, they can also be used to generate income or to acquire stock at pre-determined levels based on the strike price. In this one-hour session, we’ll take a look at put options as vehicles to help you achieve your investment goals – and we’ll also take a look at risk/reward approaches to your investing.
Join us on Tuesday, January 28 at 4:30 ET / 3:30 CT for a 60-minute session to discover even more ways to make options work for you.
This session is meant for the intermediate-level options investor.



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