JLN Options: What's Behind the Dow's 200-Point Bloodbath?; Are financial markets safer? Davos crowd say yes, but more to do; Derivatives get damning verdict at Davos

Jan 23, 2014

Lead Stories

What’s Behind the Dow’s 200-Point Bloodbath?
Dan Carroll – The Motley Fool (via Daily Finance)
What happened to the market’s momentum? That’s what investors are asking today in the midst of a horrible outing from the Dow Jones Industrial Average , which has lost 210 points as of 2:30 p.m. EST. All but a select few blue-chip stock have fallen in a gut-churning plunge that hasn’t discriminated by industry, as stocks across nearly every sector are in the red.

Are financial markets safer? Davos crowd say yes, but more to do
Steve Slater – Reuters
The financial system is safer than it was five years ago as banks have more capacity to withstand shocks, but more needs to be done to reduce risk, particularly in derivatives.

Derivatives get damning verdict at Davos
Matt Clinch – CNBC
Financial derivatives – often seen as a big contributory factor to the global financial crisis — were the target of fierce condemnation at the World Economic Forum on Wednesday.
**I feel a little aggrieved about this as it is worth noting options (being a derivative) really are not part of the problem here.  Just saying… -JB

VIX jumps 9% as stocks sell off on China data
Wallace Witkowski  – MarketWatch
The CBOE Volatility Index VIX jumped Thursday as U.S. stocks fell across the board on poor manufacturing data out of China.

Videocast: Big call buying in VIX

As Temperatures Tumble in North America, Weather Derivatives Warm Up
Sarfraz Thind – Institutional Investor
The extreme weather of the past several weeks – from ice storms to blizzards to subzero temperatures – has undoubtedly had a harsh impact on the U.S. economy. From commodity producers to job creators, few have been thrilled about the weather. But the general disruption of weather patterns around the world has planted weather-related insurance in the minds of financiers, bringing the financial instrument of weather derivatives to the fore.


NYSE Euronext Files to Allow ‘Nontransparent’ ETFs to List, Trade
Murray Coleman – The Wall Street Journal
The next salvo in a push by providers of exchange-traded funds to capture a bigger part of the $7 trillion U.S. stock mutual funds market has taken place.
The operator of the New York Stock Exchange filed a request with the Securities and Exchange Commission on Thursday to adopt a new rule that would permit so-called “nontransparent” ETFs to list and trade on its platform.

Euronext sees regulatory backing for spin-off in Feb
Pan-European financial market operator Euronext aims to get regulators’ backing for its spin-off from NYSE Euronext this or next month, its CEO said on Wednesday.

Euronext announces 2013 performance of indices and yearly recap
Press Release (NYSE)
Euronext N.V., a wholly owned subsidiary of IntercontinentalExchange Group, (NYSE: ICE), today announced the 2013 performance of its benchmark indices and annual recap. Highlights include 56 new proprietary indices launched, a significant increase in the number of outstanding Exchange Traded Products (ETPs) linked to Euronext indices and the best performance of Euronext’ Blue Chips indices since 2009.

Regulation and Enforcement

EU’s top court rejects UK challenge to short-selling law
The European Union’s top court has dismissed Britain’s challenge to the bloc’s law on banning the short-selling of shares in market emergencies.

10 Reasons Why CFTC-Imposed Position Limits Will Affect Swaps End Users
Sidney Jacobson – TABB Forum
Many swap end users assumed they would be exempt from CFTC position limits because most of their transactions would qualify as bona fide hedges. Based on the most recent CFTC proposals, however, they were wrong.
**Geez…there’s a top-10 list for everything these days. -JB

Regulating derivatives: Teething problems
The Economist
It must have seemed like a no-brainer in 2009. Leaders of the G-20 vowed to get control over the huge and opaque world of derivatives blamed by many for precipitating the financial crisis that had engulfed them.


Is the Retail Sector for Sale?
Andrew Giovinazzi – The Options Insider
Stocks are off to a muted start this year as the record highs and so-so earnings reports are at loggerheads.  For all the Iron Condor traders, the market is finally being nice to them and that could be the position for 2014.

Option Education

OIC Announces New Seminar Series for 2014
Press Release (OIC)
The Options Industry Council (OIC) announced today its evening seminar schedule for the first half of 2014, including the introduction of a new three-part series offered in various cities throughout the U.S…
The 2014 winter and spring schedule will offer 23 seminars from February 4 through May 21 in the following cities: New York, NY; Costa Mesa, CA; Dallas, TX; San Francisco, CA; Chicago, IL; Boston, MA; Parsippany, NJ; Austin, TX; San Jose, CA. The seminars will take place on weekdays from 6 to 9 p.m.



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