JLN Options: VIX Swings Widen Versus S&P 500; Options Traders Poised for Big Move in Tesla

Feb 20, 2014

Lead Stories

VIX Swings Widen Versus S&P 500
Nikolaj Gammeltoft and Whitney Kisling – Bloomberg
The Chicago Board Options Exchange Volatility Index (VIX) is posting bigger swings relative to the stocks it’s derived from, amplifying the sense of panic when equities lurch like they did three weeks ago.

Options Traders Poised for Big Move in Tesla
Kaitlyn Kiernan – The Wall Street Journal
The options market is pricing in a big move for Tesla Motors Inc. following the company’s earnings report after the close.
Tesla shares Wednesday slipped ahead of the earnings report, but remained about 30% higher for the year, just off a new record notched Tuesday.

The World Is Shocked–Shocked–that the Fed Is Staying the Course
Andrew Giovinazzi – The Options Insider
After again flirting with all-time highs, intraday stocks took about a .6% dump yesterday afternoon following the Fed Board minutes release.  They are going to continue to the Taper and there were even some hints at raising rates sometime in 2015 although that was just a few hawkish voices.

Declawing Speed Traders Is Goal of Stock Market Revamp Proposal
Sam Mamudi – Bloomberg
The only way to mitigate the negative effects of high-speed traders is to redesign a key part of how financial markets operate, according to the University of Chicago’s Eric Budish.

Put Ratio Spreads Trade in VXX
The Options Insider in Unusual Activity
Shares of the iPath S&P 500 VIX Short Term ETP (VXX) are down .79 to 43.38 today. VXX is near the lower end of the 52-week range.
Today paper traded 34454 x 17227 VXX Jan 30/40 put ratio spreads for 1.64.  ADV is 300k contracts.  The OI is 37k and 25k contracts.

Bearish bets seen on U.S. insurers ahead of Medicare rate announcement
A flurry of bearish bets placed Wednesday in the options for some health insurers caught the eye of several analysts, who said it appears that someone is banking on a sizeable drop in their stocks by the end of the week, which is also when 2015 Medicare payment rates are expected from the government.


Deutsche Boerse has little fear of hostile bid by CME
Deutsche Boerse said it has little fear of a hostile takeover bid by Chicago-based CME Group Holdings Inc, as the regulatory hurdles are too high.

Australia’s new exchange offers fast track for Chinese firms
Maggie Lu Yueyang – Reruters
Australia’s newest stock exchange launched on Thursday with plans to attract Chinese companies that want to dodge red tape at home and shake off regulatory pressure on valuations, in the latest challenge to ASX Ltd’s near monopoly.

ISE goes live with market speed bump
Press Release
The International Securities Exchange Holdings, Inc. today announced that its exchanges ISE and ISE GeminiTM have enhanced their risk management capabilities for market makers by implementing a Market Wide Speed Bump. The Market Wide Speed Bump improves risk management by limiting a market maker’s total exposure across a market.  

Blogging Options: CBOE Mid-day Update 2.20.14
Volatility as an asset class
Wal-Mart (WMT) is recently down $1.13 to $73.73 on weaker than expected Q1 guidance. February weekly call option implied volatility is at 15, March is at 14, and June is at 13; compared to its 26-week average of 15.

CBOE: Extended Trading Hours Coming for SPX, VIX Options in 3Q
The Options Insider
In a story on CBOE Optons Hub story from earlier this week, Marty Kearney wrote about the upcoming third quarter Extended Trading Hours (ETH) for options on the S&P 500 Index complex (SPX, SPXW, SPXQ, SPXPM) and on the CBOE S&P 500 Volatility Index (VIX). This is contingent upon the completion of system enhancements and approval by the Securities and Exchange Commission (SEC) for requisite rules, as noted by Kearney.

Regulation and Enforcement

Financial Regulators Are Still Flying Blind
Bloomberg Editors
The recent turmoil in emerging markets raises an urgent question: If things get worse, if markets plunge or a government defaults, do regulators know which banks, hedge funds or other institutions are most at risk?

CFTC Enforcement Efforts Will Get a Boost in 2014
Erika Kelton – Forbes
This year could be a big one for enforcement efforts by the Commodity Futures Trading Commission for a good reason:  Whistleblowers.
The demands on CFTC enforcement have increased tremendously due to the Dodd-Frank Act. The CFTC now has jurisdiction over the $400 trillion swaps market, in addition to its longstanding futures portfolio.

DERIVATIVES: CFTC relief dampens ICAP cross-border headstart
Swaps brokers are taking starkly different views on how their European platforms will be affected by the Dodd-Frank electronic trading mandate even as swap execution facilities go live this week.


Nasdaq to roll out ‘kill switch’ to help catch trading errors
John McCrank – Reuters
Nasdaq OMX Group (NDAQ.O) plans to roll out a “kill switch” that would cut off trading of its member firms when pre-set limits are breached, the exchange operator said in a regulatory filing.

SuperDerivatives to provide volatility data to Nyse Liffe
Press Release (via FinExtra)
SuperDerivatives, a leading financial information, derivatives technology and trade execution provider, announced today that it will be providing volatility data to NYSE Liffe, a leading European derivatives exchange and wholly-owned subsidiary of IntercontinentalExchange Group (ICE).

BATS Global Markets Announces Data Center Vendor
The Options Insider
On Wednesday, BATS Global Markets (BATS) and Equinix,Inc. (Nasdaq: EQIX), the global interconnection and data center company, announced that the exchange had chosen Equinix as its primary data center provider for all of the BATS exchange platforms, including the Direct Edge Exchanges – EDGA and EDGX. 


An Options Play on Google
Bloomberg (video)

For Some, Currency Hedging Is No Gain
The Wall Street Journal
Progress Software Corp. PRGS +0.99% is walking away from currency hedging, bucking a corporate practice that became commonplace in the wake of the global financial crisis. “This year the price is just too high for us,” says Chief Executive Rick Reidy.

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