Lead Stories

Yuan Tumbles to 11-Month Low as Band Widening Spurs Volatility
By Fion Li, Bloomberg Businessweek
The yuan sank to an 11-month low and options traders turned more bearish on the currency as China’s central bank doubled trading limits versus the dollar.
The onshore spot rate slid 0.45 percent to close at 6.1781 per dollar in Shanghai, China Foreign Exchange Trade System prices show. It slid as much as 0.51 percent to 6.1818, the weakest since April 2013.

VIX Futures Market COT Speculators Decrease Bearish Positions Again
By Zachary Storella, Investing.com
VIX Futures Contracts: Large traders and speculators reduced their bearish bets in the VIX futures market last week to the lowest bearish position this year, according to the latest data from the Commodity Futures Trading Commission (CFTC) released on Friday.

Strong Rally; Weak Volume
John Shipman – The Wall Street Journal
While Monday’s rally has shown few signs of easing up, trading volume has remained quite low throughout the session.
Barring some extraordinary jump the final two hours of trading, NYSE Composite volume is on pace to finish among the lowest full-trading days of the year.

Europe’s leaders warn currency volatility could harm the recovery
Delphine Strauss – Financial Times
Two years ago, European businesses were worrying about whether the euro would survive. Today, a bigger problem for many of them is its strength.
With the single currency at its highest level since mid-2011 on a trade-weighted measure, politicians are warning that adverse exchange rates could stall the eurozone’s fragile recovery.

The VIX Fear Cycle
Adam Warner – Schaeffer’s Investment Research
The market has had better weeks. It’s also had worse weeks — many of them.
The SPDR S&P 500 ETF Trust (SPY) dipped 1.9% last week, which wouldn’t exactly register on the radar of Big, Scary Declines. More like garden-variety ugly. It did serve to eliminate all gains we’ve seen in SPY in 2014 so far, and I mean literally. SPY ended 2013 at 184.69, and closed Friday at 184.66.
If it seems that a basically churning market has begat a spike in fear, well, that’s because it has begat a spike in fear.

VIX ETFs Shoot Into Ukranian Airspace – Weekly VIX ETF Report
Wall Street Sector Selector
VIX investors definitely reacted to the near 2% drop in the S&P 500 (NYSEARCA:SPY) this past week and the fear definitely appears to be focused on the ongoing Crimea crisis and overal market weakness.  With Crimea having passed a “vote” on wether to cecede and join Russia or not, and with Russian President Putin placing more troops into the region, the world and investors are not likely to respond well this coming week unless the crisis is resolved quickly.

Videocast: Eve of March expiry

Volatility Trading Digest – St. Patrick’s Day
Ivolatility in Trading & Analysis
On this day, many parts of world celebrate Irish heritage and culture from Irish Pubs where possible since by tradition there are no Lenten drinking restrictions for the day. However, the bears are more likely to be celebrating than the bulls since most indicators show equities again turned negative last week with a few exceptions.

Barron’s Online Broker Survey 2014:  How the Brokers Stack Up


CME to reassess data fees
Bernardo Mariano – Futures Magazine
CME Executive Chairman Terrence Duffy stated that “we’re taking a very judicious look at how we’re implementing this data fee and, not only the data fee, but the increase in general…if we’re missing something that we didn’t see, we’re listening to it,” in response to brokers’ criticism over fee increases that are set to raise costs for futures customers.

CME not rushing to up stake in BMD
Tanu Pandey – FMT News
CME Group Inc, a global derivatives exchange, is not looking at raising its stake above the current 25% level it now has in Bursa Malaysia Bhd’s derivative arm, a decision backed by its operating style despite the partnership model working “exceptionally well” with Bursa Malaysia Derivatives Bhd (BMD).

US exchanges quickest out the blocks in 2014
Derivatives exchanges in the US have seen improved trading volumes throughout the first two months of this year, in contrast to the activity on the platforms of their European counterparts says Joe Parsons.

Regulation and Enforcement

CFTC May Recognize Overseas Clearinghouses
The Commodity Futures Trading Commission is taking action to resolve issues related to the extraterritoriality of regulations related to OTC derivatives, including clearing and execution.
In a speech to the Futures Industry Association conference on Tuesday, acting CFTC chairman Mark Wetjen said that regulators need to establish a mutual recognition framework for foreign swap execution facilities and foreign derivatives clearing organizations.

Former CME Clerk Convicted of Commodities Fraud
NBC Chicago
A former clerk for a Chicago Mercantile Exchange trader was convicted last week of commodities fraud for manipulating trades to make more than $200,000.
Nicole M. Graziano, 33, was found guilty on Friday of four counts of commodities fraud following a four-day bench trial before U.S. District Judge James Zagel, a release from the U.S. Attorney’s office said.

CFTC Must Defend Claim it Stymied Competition
PHILIP A. JANQUART – Courthouse News Service
A federal judge preserved parts of a lawsuit that claims the U.S. Commodity Futures Trading Commission is squeezing an independent company out of the data repository business.
 The 2010 Dodd-Frank Consumer Protection Act was enacted, in part, to improve regulation and transparency of previously unregulated markets in the wake of the 2008 financial crises. The Act gave the commission authority to regulate the swaps market and has since developed new regulations that improve transparency and reduces risk associated with it.


Use Market Volatility to Your Advantage
BY David Fabian, The Street
The Ides of March have brought additional volatility in the form of increasing price fluctuations in many of the major indices we track. Despite briefly hitting a new high in the SPDR S&P 500 ETF (SPY) this month, we have seen an increase in fear brought on by slowing growth data in China and political uncertainty in Ukraine.

A Stock Split Options Trade That Favors Market Darlings
By STEVEN M. SEARS, Barrons.com
Under Armour’s well-received split argues for selling put options on high-flying triple-digit stocks.
Investors may not be too worried about record high prices of many stocks, but corporate America seems to be showing some concern.
Under Armour (ticker: UA) today announced a two-for-one stock split of its $120 stock. This follows MasterCard’s (MA) 10-for-one stock split on Jan. 22.

The Easiest Way To Profit From The ‘Options Boom’
Street Authority (via NASDAQ)
One of the few certainties in the market is that investors will always search for new ways to profit. And there is one strategy that continues to gain popularity.
That’s because it enables investors to make money regardless if stocks go up or down. It also provides the potential for investors to score big gains with very little risk.

Options Action: When Volatility Equals Opportunity
Thursday’s (March 13) sharp decline in the S&P 500 (INDEXSP:.INX), uncertainty in Crimea, and continued worry about a Chinese slowdown has been driving strong demand for protective volatility products.
The current situation sets up an attractive options trade in the iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX).

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