JLN Options: Last-Second Options Bet on Saks Raises Questions

May 22, 2013

Lead Stories

Last-Second Options Bet on Saks Raises Questions 
Kaitlyn Kiernan, The Wall Street Journal
Options traders are raising questions about the timing of a set of last-minute trades in Saks Inc. Tuesday that stand to bring in huge profits following news the company may be exploring a sale.

IntercontinentalExchange CEO says lack of cross-border derivatives coordination ‘damaging’
Megan Hickey, Medill News Service (via MarketWatch)
The failure to harmonize the cross-border application of derivative rules “will be damaging,” according to IntercontinentalExchange Chairman and CEO Jeffrey Sprecher, who testified Tuesday on Capitol Hill at a hearing on the future of the Commodity Futures Trading Commission.

VIX Makes Another Jump Despite Record Highs for Dow and S&P 500
Wall Street Sector Selector
Record-high advances for the Dow and S&P 500 did not stop the VIX from jumping 2.69 percent as investors pondered how long the rally can last.

Derivatives trader: ‘Trading can take over your life – but only if you let it’
Joris Luyendijk, The Guardian
“It’s funny. I am the current public bogeyman – not only am I a migrant, but I am a “banker” (deliberate use of inverted commas) too! Ironically, I can buy financial security by undertaking a job dealing with understanding insecurity and uncertainty. That’s a trade I am prepared to make.

Sinful Broker Denial And How An Index Ends It
Amity Shlaes, Forbes
“The only thing we have to fear is fear itself,” Franklin Roosevelt once said, and these days the market experts still seem to be heeding him. Along with such old measures as interest rates and indexes of consumer confidence, investment advisors now press clients with a variety of newer “fear” or “uncertainty” indexes, such as the Chicago Board Options Exchange Volatility Index, or VIX.

Confusion to the Skeptics  
Randall W. Forsyth, Barron’s
Amid contradictory signals, forecasts of rising P/Es and dividends force laggard bears to buy.

Hedge Funds Trail S&P 500 by 10 Percentage Points, Goldman Says
Jesse Westbrook, Bloomberg
Hedge funds’ returns have stayed “lackluster” this year, with the $2.3 trillion industry trailing the gains of the Standard & Poor’s 500 Index by about 10 percentage points, according to Goldman Sachs (GS) Group Inc.

Is the S&P 500 Cheap?
ETF Guide (via NASDAQ)
The S&P 500 has soared 14.5% since the start of the year. Are equity valuations stretched?

This Market Rally Has to Stop Sometime. Doesn’t It?
Jeff Cox, CNBC
Stock market rallies have to end sometime for sure, but history suggests the current one, despite its seemingly bloated nature, doesn’t have to end anytime soon.

Videocast: Parsing huge VIX volume


ICE Futures Europe Sets Daily Volume Record in Coal Options
Press Release (ICE)
IntercontinentalExchange (NYSE: ICE), a leading operator of global markets and clearing houses, today announced that ICE Futures Europe reached a daily volume record of 9,075 contracts in ICE Coal options on May 21, 2013. The previous volume record was 7,200 contracts on December 4, 2012.
Volume for ICE Coal futures and options also reached a combined record of 17,641 contracts on May 21, 2013, compared with the previous combined record of 15,590 on March 28, 2013.

CBOE, CFE, C2 and CBSX Trading Schedule for the Memorial Day Holiday (full text)
Press Release (CBOE)
CBOE Holdings, Inc. (NASDAQ: CBOE) announced the following trading schedule for Chicago Board Options Exchange (CBOE), CBOE Futures Exchange (CFE), C2 Options Exchange (C2), and CBOE Stock Exchange (CBSX) in observance of the Memorial Day Holiday:
– Friday, May 24:     CBOE, CFE, C2 and CBSX will have regular trading hours for all products.
– Monday, May 27:     CBOE, CFE, C2 and CBSX will be closed.


Treasury chief says foreign officials too critical on swaps rules
Emily Stephenson and Sarah N. Lynch, Thomson Reuters
Foreign countries are being too critical and potentially hurting delicate negotiations with U.S. regulators over how broadly they should apply new over-the-counter derivatives rules to trades that cut across borders, U.S. Treasury Secretary Jack Lew said on Tuesday.

Gensler’s Recusal Criticized in CFTC Watchdog’s MF Global Report
Silla Brush, Bloomberg
Chairman Gary Gensler’s recusal from the U.S. Commodity Futures Trading Commission’s investigation into the collapse of MF Global Holdings Ltd. (MFGLQ) was unnecessary and wasn’t required by ethics rules, according to the agency’s internal watchdog.


RTS Realtime Systems to Open Data Center in Dubai 
Press Release (via The Wall Street Journal)
RTS Realtime Systems Group (RTS), a leading global trading solutions provider, today announced plans to open its newest data center in Dubai, the first Middle East site in its global data center network. Expected to go live in mid-July, the new hub in the RTS global trading network will offer ultra-low latency access to the Dubai Gold & Commodities Exchange (DGCX), one of the world’s fastest growing exchanges.


As Markets Soar Into Unknown Territory, Collar Profits With the S&P 500
Oliver Pursche, Minyanville (via NASDAQ)
While the news is all pretty good from an investment perspective, we’re still in unknown territory. Continued monetary easing around the world may continue to drive markets up further.

Protecting Your Portfolio With Implied Volatility 
Seeking Alpha
The global equity rally in developed nations has created significant headwinds for implied volatility. Implied volatility (IV) is the market’s estimate of how much a security will move over a specific period of time on an annualized basis.

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