Lead Stories

You Can’t Keep the Panic Out of Stocks Forever, VIX Traders Say
By Callie Bost – Bloomberg
While the turmoil that rocked bond and currency markets in past weeks has been mostly absent from equities, it won’t be forever, options traders speculate.

Traders taking cover for a big shift in market mood
By Shawn Langlois – MarketWatch
You think you’ve heard enough bubble talk to last a few lifetimes? Try being a strategist who covers Chinese equities, like Citi’s Markus Rosgen. The question was raised to him again, in the face of this week’s massive outflows from emerging markets.
And he answered like a guy who’d rather be talking about something else.
“All people see is a bubble — and they have been stuck on this theme like an old-fashioned record for years,” he told the Financial Times. “If you don’t own it, it is a bubble. If you own it, you are in a bull market.” In other words, can we change the subject?
Not yet.

Credit Suisse Thinks Waning U.S. Stock Volatility Points Towards a Bubble
By David Wilson – Bloomberg
Relative calm in U.S. stock trading is an indication that the current bull market may end with a bubble, according to Andrew Garthwaite, a global equity strategist at Credit Suisse Group AG.

Traders bet there’s money in banks
By Lawrence Lewitinn – CNBC
Banks are rallying as rates rise, and some traders are betting one name in particular will see big gains.

Asian Oil Refiners Display Animal Spirits as Crude Glut Persists
By Heesu Lee and Debjit Chakraborty – Bloomberg
The surge in oil supplies that has crushed prices is prompting some refiners in Asia to buy more crude that can be delivered immediately rather than at some future date, adding to pressure on sellers.


US Listed Options Volumes Slump in May as Overall Industry Spreads Continue to Tighten
TABB Forum
US listed options volumes came in at 304.1 million contracts for May 2015, 7.1% lower than last month’s 327.6 million contracts. Total volume year-to-date measured 1.62 billion contracts, 7.8% lower compared to the year-earlier period.

CBOE Livevol purchase extends exchange foray into services
When the Chicago Board Options Exchange (CBOE) last week bought equity volatility analytics and data provider Livevol, Inc. for an undisclosed amount, it became the latest exchange to take over a job formerly done by its members.

Regulation & Enforcement

EU regulators consult on non-cleared margin rules
By Cian Burke – Futures & Options World
European regulators on Wednesday launched the latest consultation on the draft regulatory framework for risk mitigation techniques, including initial and variation margin, for non-cleared over-the-counter (OTC) derivatives.
The consultation paper focuses on a narrow set of topics not yet resolved in the first round of consultations, which ended in April 2014.


Options Trading Strategies: Low Fear Levels Make for Cheap Option Protection
By Bob Lang – CBOE Options Hub
Summer trading usually ushers in a time a low volatility and often very little interest. Markets tend to make sharp and jagged moves as liquidity is thin. At this time with markets at/near all time highs and nobody truly wants to get off the train, it makes for some difficulty but often some opportunities arise when others are looking the other way. Paraphrasing Robert Frost, ‘The road less traveled makes all the difference’.

All The Right Option Moves: Take The Improv Out Of Earnings
The Lindy Hop, the Running Man, and the Macarena are all child’s play to an option trader who likes to stay a few steps ahead of the market, right?
When it comes to moves, you’ve got ’em all—except maybe the shuffle around an earnings announcement. Let’s call earnings the free-form dance of the stock market. Sometimes you nail it, and sometimes you flop.

A Dead Simple Strategy for Slow Bull Markets
By Martin Hutchinson -Trefis
Let’s face it: Dividends are hard to come by these days.
It’s not surprising, therefore, that some income investors have taken to the options market to increase their returns.
More specifically, they’re selling call options on the dividend stocks they own – and it does indeed boost their income.


Understanding Option Skew — What it is and Why it Exists
By Ophir Gottlieb – Capital Market Laboratories
I’ve had requests for a few articles on basic and advanced option theory. Let’s start with my favorite part of option pricing, the volatility skew.

The Big $VIX Trade – Part 3
By Russell Rhoads, CFA
The title of this blog refers to three parts and this is because we just had the third trade in the ongoing saga of a large 1 x 2 call spread in VIX options come into the VIX option pit yesterday. There is actually another piece to the puzzle as when the first trade was initiated part of the transaction involved a large sale of call options and that position may still be open. I do my best to keep blogs short, but I’m going to run through all three transactions individually and this cannot be done in a 500 word space.


National 4-H Council and CME Group Launch Third Annual Commodity Carnival at State Fairs
Press Release
CME Group – the world’s leading futures exchange – and the National 4-H Council – America’s largest youth development organization are partnering for a third consecutive year to bring their popular and award-winning Commodity Carnival fair experience to more than 100 state and county fairs in nine states this summer. An interactive and educational game about the business of agriculture, the Commodity Carnival teaches young fairgoers how to manage the costs and risks associated with bringing an animal – this year, a hog – to market. Beyond the fairgrounds and throughout the year, the Commodity Carnival mobile app, Risk Ranch, enables people of all ages to try their hand at agricultural risk management from their mobile devices, as well as online.

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