Lead Stories

What Was Behind Yesterday’s Crazy S&P 500 Options Volume?  
Adam Warner – Schaeffer’s Investment Research
Strange volume in the S&P 500 Index (SPX) August puts yesterday, yowza. With the index in the 1,680 range, 29,000 of the August 1300 puts traded, 39,632 of the August 1250 puts traded, and 17,933 of the August 1200 puts traded. In fact, every put in the August series down to 1115 traded on the open. Even the August 500 puts traded!
**Not sure where it all ended today but 2.5 hours into today’s trading 10 million options had been traded putting it on a breakneck pace for the day. -JB

Fed’s Messages Raise Volatility in Threat to Profits: Currencies
Lukanyo Mnyanda & Liz Capo McCormick –  Bloomberg
The Federal Reserve’s mixed messages on monetary policy are stoking volatility in the $4 trillion-a-day currency market, raising the odds that companies will have a harder time setting up exchange-rate hedges designed to protect overseas earnings.

G20 faces more market volatility: Russia
Lidia Kelly and Douglas Busvine – Reuters
The Group of 20 should brace for more market volatility even as an improving U.S. economy allows the Federal Reserve to scale back its monetary stimulus, Russia’s summit coordinator Ksenia Yudayeva said on Wednesday.

Dow, S&P 500 hit record highs on earnings and Bernanke
Caroline Valetkevitch – Reuters
The Dow and the S&P 500 rose to all-time intraday highs on Thursday as Morgan Stanley and others reported better-than-expected earnings and Federal Reserve Chairman Ben Bernanke’s comments further reassured markets.

Aite Group weather forecast for the US equities options industry
After experiencing 20 consecutive years of nearly parabolic growth, US listed equities options volume declined a whopping 13% in 2012. On such seas, the US listed equities options industry faces plenty of strong headwinds, among them possible liquidity fragmentation from Penny Pilot Program success, frequent IT glitches, and possible changes in the existing tax law that governs derivatives.

TOM Changes Dutch Options Tickers After Court Ruling
Nandini Sukumar – Bloomberg
The Order Machine, a Dutch alternative trading system, changed the ticker symbols for options based on Amsterdam’s AEX Index after a court ruled it infringed NYSE Euronext (NYX)’s trademark rights.

Videocast: Large call spread in VIX

Hedge fund trading changes to withstand greater scrutiny and tougher markets, says TABB
Regulatory scrutiny by the Securities and Exchange Commission and the brutal dogfight for scarce alpha are pushing US hedge funds to implement a more rigorous and formalised trading process, according to a study from TABB Group.

Wall Street Launches a Massive Cyber-Attack — On Itself
Derek Klobucher – Forbes
Wall Street’s largest trade group is about to try taking down the financial nerve center of the United States. The FBI and SEC, as well as the U.S. departments of Treasury and Homeland Security, are among about 50 banks, exchanges and other organizations participating in a high-tech war game to test institutional and individual readiness for an all-out cyber-assault.
**A hackers dream.  Try to take down Wall Street, get paid to do it, and it is legal. -JB


Derivatives key to exchanges’ fortunes
Ajay Makan – Financial Times
Exchange groups are on a tear. Shares in London’s LSE, Chicago’s CME and the IntercontinentalExchange are all up more than 40 per cent this year.

Merger only hope for TSE
The Japan News
The Tokyo Stock Exchange’s merger with the Osaka Securities Exchange’s cash equity market was carried out with one purpose in mind: survival.  The new cash market, which debuted Tuesday with 3,423 listed companies, has the third-largest combined market value in the world.


Regulators give markets leeway on financial benchmarks
Huw Jones – Reuters
Global regulators will give markets some leeway in compiling financial benchmarks, stopping short of U.S. calls for more radical action to stamp out price-rigging.

CME’s Duffy Warns Senate That Proposed CFTC Rule to Hurt Brokers
Matthew Leising – Bloomberg
A proposed U.S. rule meant to protect futures customers’ money in a collapse like MF Global Holdings Ltd. could “fundamentally change” how the market functions, according to Terrence Duffy, executive chairman of CME Group (CME) Inc.

Options Education

Comparing Volatility Skew and CBOE’s Volatility Indexes
Matt Moran – CBOE
How does 30-day implied volatility at various strike prices compare to related volatility indexes?  This Blog provides a brief overview of some sample data and graphs on this topic.


The Strategy That Pays Both Bulls and Bears 
Stephen Solaka – Barron’s
Investors can use options that will pay them to wait for the market to move higher or lower.

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