Lead Stories

Volatility rises as investor jitters grow
Jamie Chisholm – Financial Times
Market nervousness is increasing. As year end approaches investors are looking to protect gains made; are wary of another bout of budget wrangling in Washington; and, of course, some are cowed by the prospect of the Federal Reserve reducing its stimulus programme.

Still Room for Santa Claus Rally With Sharp Rise in Stocks VIX
Kaitlyn Kiernan – The Wall Street Journal
The Chicago Board Options Exchange’s Volatility Index notched its longest streak of gains in more than 19 months as investors look to protect those gains into the end of the year. But strategists say the sharp rise in the so-called fear gauge is likely to be short-lived.

How to bet against the bitcoin megabubble
Stephen Gandel – Forbes
Can you bet on the likely eventual bitcoin crash?
You bet. But it’s an expensive trade. And even if you’re right, you won’t walk away with much, if anything…
What you can buy is a derivative contract that will rise in value when bitcoins fall in price. There are a number of places that sell options and futures on bitcoins.
**Look for a JLN Special Report on bitcoin in a few days.  -JB

Fed Beige Book Offers “Modest” Optimism
Dan Collins – Dan Collins Report
Although the Federal Reserve’s Beige Book (Summary of Commentary on Current Economic Conditions by Federal Reserve District) released on Wednesday Dec. 4 used the words modest or moderate seven times in its three-paragraph introduction, Miller Tabak’s Chief Economic Strategist Andrew Wilkinson saw signs of more robust optimism.

What Correction? 1 Key Sign Investors Remain Complacent
Dan Caplinger – Daily Finance
The losing streak for the U.S. stock market could reach five days today if current losses in the Dow Jones Industrials and S&P 500 don’t reverse themselves. That pullback has renewed warnings from experts that the market is long overdue for a correction of 10% or more. Yet when you look at the CBOE’s Volatility Index and the exchange-traded products iPath S&P VIX ST Futures and VelocityShares 2x VIX ST , you can see that traders aren’t taking threats of an imminent pullback seriously.

Here’s the One Threat to Stocks That No One Is Expecting
Matt Nesto – Yahoo Finance
It’s been said that the journey is more important than the destination.  That enjoying the ride, so to speak, is better than arriving.  Apply that same logic to the stock market, and stir in a bunch of recent talk about bubbles and risk tolerance, and some investors think the market we’ve come to know and love over the past six months will not be the market we have for the next six.

Videocast: Trader sees lower VIX

S.Korean market volatility edges up from contrived historic lows
Vidya Ranganathan – Reuters
After months of being artificially suppressed at historic lows, the price of volatility in South Korean stock and bond markets is moving higher and towards more realistic levels.
The approaching year-end has driven down volumes in structured notes and other derivatives that had kept a lid on Korean markets, revealing their actual volatility.


The ICE man cometh
Carol J. Loomis – CNN Money
The New York Stock Exchange, an icon for two centuries, has just been acquired by an upstart exchange and clearinghouse company carrying the cool name of ICE (for IntercontinentalExchange). The company’s founder and CEO, generally a cool customer himself, is an electronic-trading entrepreneur and visionary, Jeffrey Sprecher, 58. Starting ICE 13 years ago in Atlanta, he built it into a lean, cost-conscious company that in 2012 had $1.4 billion in revenue, a splendid $550 million in profit, and a pre-deal market value of $9.3 billion.

CBOE Targets Extending VIX into Asian Hours Next Year
Nandini Sukumar – Bloomberg
CBOE Holdings Inc. (CBOE) will extend the operation of its benchmark VIX futures index into Asian trading hours next year, according to the chief executive officer of the largest U.S. options market.

Regulations and Enforcement

Regulator O’Malia Cites ‘Insanity’ in U.S. Overseas Swaps Policy
Silla Brush & Robert Schmidt – Bloomberg
Scott O’Malia, a Republican, criticized recent staff opinions on the agency’s oversight of foreign derivatives deals as “regulatory insanity.” The CFTC told banks last month that it would impose Dodd-Frank rules when they arrange trades domestically and then book them overseas.
**”When the world goes mad, one must accept madness as sanity since sanity is, in the last analysis, nothing but the madness on which the whole world happens to agree.” ~George Bernard Shaw

The Big Question: Will Volcker Prevent Next ‘London Whale’
Scott Patterson – The Wall Street Journal
“The devil here is in the details.”
Janet Yellen’s comment in Congressional testimony last month captures the complex challenges that have faced regulators crafting the Volcker rule, the Dodd-Frank rule that bans proprietary trading and is widely expected to be approved next week after years of wrangling among the five regulators Congress asked to write the rule.
** “Only two things are infinite, the universe and human stupidity, and I’m not sure about the former.” ~Albert Einstein


Intercontinentalexchange Group Inc : Securities trade group urges hardware revamp after Nasdaq August halt
Press Release (via 4-Traders)
A trade association for the securities industry called on Thursday for revamping the system governing the hardware behind the trading halt in Nasdaq stocks in August, a move that would likely reduce the control the two leading U.S. stock exchange operators have over that hardware.

Actant ready for CBOE RVX Options
Press Release (via Automated Trader)
Actant, the provider of trading solutions for financial firms, has announced its readiness to support market makers quoting CBOE RVX Options.
“Market makers already using Actant Quote to trade CBOE VIX Options benefit from the seamless integration provided between the CBOE and CFE exchanges. We look forward to extending the value we bring our clients with the introduction of CBOE RVX Options,” said Dan Sacks, CEO. “Our mass quote automation heritage, coupled with our unique programming flexibility, ensures members will enjoy making markets on a new product that has the potential to mirror the success of CBOE VIX Options.”


ICE: How to Profit as the Stock Rallies
Steven M. Sears – Barron’s
The IntercontinentalExchange (ticker: ICE), which has long existed in benign obscurity, is suddenly attracting significant attention in the stock and options market.

Options Education

Picturing Option Profits – Volatility
Russ Allen – The Options Insider
In the last three articles I talked about how Delta and Gamma are portrayed on the graphs. Today we’ll look how changes in implied volatility can be expected to affect things, as measured by Vega.


CBOE Holdings to Present at J.P. Morgan SMid Cap Conference on December 11
Press Release (CBOE)
CBOE Holdings, Inc. (NASDAQ: CBOE) announced today that Alan J. Dean, Executive Vice President, Chief Financial Officer and Treasurer, will present at the 12th Annual J.P. Morgan SMid Cap Conference in Chicago on Wednesday, December 11, 2013, at 1:35 p.m. Central Time.
The presentation, to be broadcast live over the Internet, can be accessed at www.cboe.com under Investor Relations, Events and Presentations.  Approximately 24 hours after the live presentation, an audio Webcast will be available for replay at the same address.



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