Lead Stories

Why Investors Don’t Need to Fear Quadruple Witching Day
Tomi Kilgore – The Wall Street Journal
Uh-oh. It’s “quadruple witching” day in the market.
Four times a year, the ominous-sounding phrase makes its rounds on Wall Street, but analysts contend it’s usually anything but ominous—especially recently.
***JB: I started with a string of “fear” related one-liners then figured best to spare you.

Bears Turn Up Plug Power Bets as Fuel Cell Hype Fades: Options
Eric Lam – Bloomberg
Options traders are loading up on bearish bets on one of this year’s best stocks: Plug Power Inc. (PLUG)
The company, an unprofitable maker of fuel cells, has seen its shares surge almost 3,000 percent in the past year on signs the technology is a viable source of electricity.

CBOE RMC Presentation: “Rebalancing Using Options”
Matt Moran – CBOE
At the 30th Annual CBOE Risk Management Conference (RMC) this week, the topic of “Asset Allocation Rebalancing Using Options” was covered by two expert speakers –
Dr. Christoph Gort, Partner, SIGLO Capital Advisors
Pav Sethi, Chief Investment Officer, CEO, Gladius Investment Group

Does the VXX decay anymore?
Unless I am mistaken, the new Fed Chairman lobbed the interest rate bomb over the market yesterday, and the initial reaction was sell, sell, sell.  Things settled down today a bit but there were still some scars.  Bonds did not really move much, which is due more to the new geopolitical uncertainty around new Czar Putin.  No one is in a hurry to leave them.  Markets have come full circle from last year when the Fed started hinting exit.  Between Federal belt tightening and the Taper, stocks have done nothing but rally.  So why can’t the VXX decay?

Sometimes, The Stock Market And The ‘Fear Index’ Will Surge Together For Years
Sam Ro – Business Insider
The CBOE Volatility Index, aka the VIX, is a pretty weird metric in the financial markets.
Volatility isn’t exactly quantifiable because you can’t observe it directly. However, options gurus figured out that you can derive it from options prices.

Someone’s Betting Big On Coming Volatility; How And Why They Might Be Doing That
Robert Wagner – Seeking Alpha
Recently I wrote a series of articles detailing investment strategies using the VIX, an index designed to quantify and measure the volatility of the S&P 500. The VIX index is unique in that it doesn’t trend like most indexes, it “beats” like an EKG monitor.

Fund Managers: Now They’re Cooking With Options
Adam Warner – Schaeffer’s Investment Research
An option a day keeps the underperformance versus your peer group away!
Something like that.
Options guru John Marshall of Goldman Sachs delivered a presentation at the CBOE Risk Management Conference, and he had some very interesting data as per Matt Moran on the CBOE Options Hub.

Gold and Volatility
It’s been a bad week for gold bugs who have had to deal with the disappointment of failing to break above the psychologically important $1,400 level. A double whammy of a less dovish than expected Fed press conference and receding Russian/ Ukraine fears have sent gold down to a low of $1,320.

Videocast: Cheap VIX calls bought

36 South to Start New Volatility Hedge Fund Targeting Australia
Bei Hu – BloombergBusinessweek
36 South Capital Advisors LLP, whose Black Swan Fund returned 204 percent in 2008, is starting a new hedge fund targeting Australian (ASX) institutions seeking protection from market downturns and additional returns.

The Responsible Way to Rein in Super-Fast Trading
Gary Cohn – The Wall Street Journal
Equity-market structure in the U.S. has made important advances over the past 20 years, promoting greater transparency and liquidity. Three powerful forces have been at work: technology, regulation and competition. The result has been narrower spreads, faster execution and lower overall explicit costs to trading stocks.
***JB: I say replace the wiring with some Dixie Cups and string and see how that goes.

High-Speed Trading Inquiry Is Going Nowhere Fast
New York Attorney General Eric Schneiderman has set himself the noble goal of making financial markets safer for the small investor. Unfortunately, his latest foray into the world of high-frequency trading will achieve little or nothing toward that end.

Schneiderman Joins Einstein Pressuring High-Speed Trading
Michael P. Regan and Sam Mamudi – Bloomberg
The most important rules governing high-speed electronic trading weren’t written by market regulators, New York’s attorney general or a computer whiz. They were formulated a century ago when Albert Einstein figured out nothing could travel faster than light.


CME Group to launch energy, metal weekly options in April
Frank Tang – Reuters
U.S. derivatives exchange operator CME Group Inc said on Thursday it will launch shorter-term weekly energy and metal option contracts beginning in April in a bid to boost trading volume.

FT: CME Receives Opposition for Plans to Shrink Board
The Options Insider
Last month, the CME Group (CME) announced its Board of Director nominees. From the announcement, it included plans to cut the number of board members by 17 percent. However, this still has CME sitting with one of the largest number of board members for a publicly traded company, noted Crain’s at the time.


A VIX Buy Signal Worth Watching
David Moenning – Inside Futures
Before we were so rudely interrupted by all the hullabaloo surrounding Ms. Yellen’s definition of a “considerable” amount of time (now known to be six months), we were looking at how the VIX could be used to help identify decent entry points for traders looking to get long the U.S. stock market.

Options Education

High Concept: A Lesson on Delta, Courtesy of Delta Air Lines, Inc. (DAL)
Elizabeth Harrow – Schaeffer’s Investment Research
Thursday’s most active option on Delta Air Lines, Inc. (NYSE:DAL) was the March 33.50 put, where 1,752 contracts were traded. Roughly 86% of these contracts traded at the bid price, implied volatility on the option fell by 4.2 percentage points on the day, and open interest rose overnight by 1,384 contracts — suggesting that options players sold to open new DAL puts yesterday.



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