JLN Options: NASDAQ OMX BX Options(SM) Options Exchange Joins OCC

Jun 29, 2012

Lead Stories

NASDAQ OMX BX Options(SM) Options Exchange Joins OCC
Press Release
OCC and The NASDAQ OMX Group, Inc. announced today that NASDAQ OMX BX Options(SM) has become an OCC participant exchange. NASDAQ OMX BX Options(SM) began operations today, Friday, June 29.
The addition of NASDAQ OMX BX Options(SM) to the NASDAQ OMX exchange suite now brings the total number of options markets in the U.S. to ten.
“Our new platform will be a home for retail order flow that is transparent and it will compliment PHLX and NOM, giving our customers a complete liquidity destination for options trading,” said Tom Wittman, Head of U.S. Options at NASDAQ OMX.
** TEN options exchanges?  An embarrassment of riches? –JB

EU Agreement Ignites Buying Frenzy on Wall Street
Adam Samson, FOXBusiness
Traders across the globe scooped up equities, commodities and other risky assets amid optimism that European policymakers are taking decisive measures to put an end to the continent’s debt crisis…
In a sign of the breadth of the buying, volatility dropped nearly 10% as tracked by the CBOE’s VIX and there were six trades in advancing shares for each in a declining share on the New York Stock Exchange.
** Buy the rumor today; sell the facts next week. Will the Germans really back whatever plan they came up with? –DA

Study raises concerns about stock price quotes
Herbert Lash, Reuters
New research released this week raises fresh concerns about the usefulness of a stock-price quoting system sanctioned by U.S. regulators.
Specifically, the price differential between the “publicly” available best offer for a stock and what traders see via direct feeds from exchanges can be 3-1/2 cents on volatile days, according to data by researchers in California and New York…
The gap widens on volatile days, and has a correlation with Wall Street’s so-called fear gauge, the CBOE volatility index or VIX, said John Hanna of Redline.

Short Term VIX Futures Growing St 43% Per Year—At Least
Vance Harwood, FOREX Pros
Last week the CBOE’s VIX futures set some new volume records.  While volume is interesting, I think the real story is the open interest of VIX futures contracts. Is the volume just churn, or are VIX futures contracts being created or eliminated?   Since raw volatility is tough to buy, VIX futures market makers must buy other things, like SPX options to hedge the VIX contracts they create—so there is the potential to influence other markets.

OptionMonster Daily Volatility Report with Mike Palmer of Group1 Trading:


NYSE Announces Third-Quarter 2012 Circuit-Breaker Levels
Press Release
The New York Stock Exchange will implement new circuit-breaker collar trigger levels for third-quarter 2012 effective Monday, July 2, 2012.
Circuit-breaker points represent the thresholds at which trading is halted marketwide for single-day declines in the Dow Jones Industrial Average (DJIA). Circuit-breaker levels are set quarterly as 10, 20 and 30 percent of the DJIA average closing values of the previous month, rounded to the nearest 50 points.
In third-quarter 2012, the 10-, 20- and 30-percent decline levels, respectively, in the DJIA will be as follows:
Level 1 Halt
A 1,250-point drop in the DJIA before 2 p.m. will halt trading for one hour; for 30 minutes if between 2 p.m. and 2:30 p.m.; and have no effect if at 2:30 p.m. or later unless there is a level 2 halt.
Level 2 Halt
A 2,500-point drop in the DJIA before 1:00 p.m. will halt trading for two hours; for one hour if between 1:00 p.m. and 2:00 p.m.; and for the remainder of the day if at 2:00 p.m. or later.
Level 3 Halt
A 3,750-point drop will halt trading for the remainder of the day regardless of when the decline occurs.


SEC finalizes rules for reviewing swap clearing
Sarah N. Lynch, Reuters
U.S. securities regulators finalized new rules on Thursday that will help the agency determine whether certain swaps should be cleared, a process that protects against default.
The Securities and Exchange Commission’s rules lay out how clearing agencies, such as IntercontinentalExchange’s ICE Credit Clear, will provide information to regulators about the swaps they plan to accept for clearing.


Squeezing Profits From a Bearish Stock Market
Use covered calls on a “short” index fund as a way to generate income in a weak stock market.
Mark D. Wolfinger, Barron’s
Looking for a smart investment idea for a bearish market? Take a look at a new twist on covered call writing.
Yes, covered call writing – selling a call option on a stock or a stock index already owned — is designed for traders who have a neutral to slightly bullish market outlook and is not appropriate for raging bulls or frightened bears.

The Evolution Of European Equity Risk
There are many ways in which investors can evaluate risk related to the euro zone…
On the volatility side, the VSTOXX (EURO STOXX 50 Volatility Index) the EVZ (CBOE EuroCurrency Volatility Index) provide a market assessment of risk and uncertainty in euro zone stocks as well as the currency.

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