Lead Stories

Meet the Biggest Bear
Steven M. Sears – Barron’s
Recent trading by one major investor implies that he sees the VIX, now around 16.8, more than doubling by August.

Wall Street Week Ahead: Fed fears may be gone but brace for volatility
Angela Moon – Reuters
Panic selling on fears of an early exit of the U.S. Federal Reserve’s stimulus efforts may be over, but the stock market may still face wild intraday swings as investors scramble to position themselves for Friday’s payrolls report.

VIX Sends the Market Good Vibes
Brian Stutland – CNBC
The market is rising, but not as quickly as the VIX is diving. And that could be great news for the month ahead.

Options Strategies Seizing Spot As Core Allocation
Eric Metz – Financial Advisor
Today’s economic environment has forced advisors to wake up to certain harsh realities, one of them being the traditional 60/40 allocation model’s irrelevance and inability to harness volatility in a way that truly helps investors. A growing number of advisors are adding options strategies to their client portfolios as a core allocation that addresses the rampant risk in today’s uncertain climate.


How rising interest rates brighten CME’s future
Lynne Marek – Crain’s Chicago Business
CME Group Inc.’s business is on the rise for the first time in five years, with a 52 percent jump in its stock price this year better positioning the world’s largest futures exchange company for more growth.

New Trading System Name: T7
Press Release (ISE)
Deutsche Börse Group (DBG) recently announced the rollout of its “7-Series” technology infrastructure across DBG’s trading and clearing components. ISE was the first DBG exchange to introduce the new trading architecture with the rollout of Optimise in 2011. In recognition of the ongoing extension of this common trading architecture across DBG, and the introduction of the 7-Series brand family, we are excited to announce that ISE will now refer to its technology platform as T7, replacing the Optimise brand.
http://jlne.ws/14m94Bd (PDF)

The Options Industry Council Announces June Options Volume Up 11 Percent
Press Release (OIC)
The Options Industry Council (OIC) announced today that 361,180,257 total options contracts traded in June, which is up 10.86 percent compared to last year when 325,813,094 contracts were traded.
Trading volume for the first half of 2013 stood at 2,112,336,178 contracts, 1.35 percent higher than last year’s 2,084,102,906 contracts. Year-to-date average daily volume was 17,034,969 contracts, up 2.17 percent compared to last year’s 16,672,823 contracts. Average daily volume in June came in at 18,059,013 contracts, 16.40 percent more than the 15,514,909 contracts in June of last year.

ISE Reports Business Activity for June 2013
Press Release (ISE)
The International Securities Exchange (ISE) today reported an average daily volume of 2.7 million contracts in June 2013. This represents an increase of 9.3% compared to June 2012. Total options volume for the month was 54.3 million contracts. ISE was the second largest U.S. equity options exchange in June with a market share of 16.7%*.
http://jlne.ws/17AvGzf (PDF)

CBOE Holdings Records Highest Volume For Any Month In 2013 During June
Press Release (CBOE)
CBOE Holdings, Inc. CBOE +0.23% reported today that June trading volume for options contracts on Chicago Board Options Exchange (CBOE) and C2 Options Exchange (C2) and futures contracts on CBOE Futures Exchange (CFE) totaled 107.52 million contracts, the highest monthly volume to date in 2013. Average daily volume (ADV) in June was 5.38 million contracts, up 14 percent from 4.71 million contracts in June 2012 and up 10 percent from 4.87 million contracts in May 2013.


EU: 13 banks broke antitrust rules in derivatives
Matthew Dalton – MarketWatch
European antitrust authorities have concluded that 13 investment banks colluded to prevent the move of the lucrative global business of trading credit derivatives to regulated exchanges.

Regulators bolster bank capital rules for derivatives
Huw Jones – Reuters
Banks will have to set aside capital to back their risky financial derivatives trades under draft rules published by global regulators on Friday to safeguard market stability.

CME Pulls Plan to Update Wash Trade Rule Amid CFTC Criticism
Matthew Leising – Bloomberg
CME Group Inc. (CME), the owner of the world’s largest derivatives market, withdrew an updated rule interpretation that bars traders from engaging in transactions with themselves amid criticism from a Commodity Futures Trading Commission official.

Wall Street Cop Goes After Corzine — and Derivatives Loopholes
Rana Foroohar – Time
Gary Gensler, the chairman of the Commodity Futures Trading Commission, has been the toughest cop in D.C. since the financial crisis, and the only person really willing to take on Wall Street.
**Apparently tough cops are unwelcome.  Gensler’s proposed replacement has zero experience in financial regulation and barely any at all in finance as a whole. -JB


Fear of Missing Out
Bob Lang – CBOE
One of the four fears of trading is the fear of missing out.  Oh, the regret we feel when a trade goes away from us.  I’ve felt it many times, so have you.  The pain from not participating seems worse than that of getting punished on a bad trade.  In options trading you can easily miss opportunity, kicking yourself all the way to chasing a trade where you should not be doing so.  We’ve all been there, but how do you avoid missing out?

All Quiet on the Wall Street Front 
Steven M. Sears – Barron’s
Traders don’t seem to expect much action this week. Here’s how to hedge against complacency.

Renaissance Technologies: Buy-And-Hold Investor
Matt Levine – Dealbreaker
You can think of a margin loan as being like an option on the underlying security: if I lend you $50 (nonrecourse) against a $100 share of stock, and tomorrow the stock is worth $45, then you’ve lost $50 and I’ve lost $5, same as if I wrote you a $50 strike put option on the stock.1 This isn’t quite right – margin calls, etc. – but what it lacks in precision it gains in tax efficiency:
** If it walks like an option and quacks like an option is it still an option? -JB

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