Lead Stories No Nervousness on ‘Fiscal Cliff,’ but It’s a Headwind
Bob Pisani, CNBC
So the spread between the cash VIX (roughly 16) and the most active front month contract (February, at roughly 17) is about 100 basis points. The normal spread is at least 200 basis points. Not only is there no worry, but there is less demand for protection than might be expected.
http://jlne.ws/STnlRf The Biggest Waste of Money in 2012
Dan Caplinger, The Motley Fool
Smart investors understand that in order to earn healthy returns, you have to be willing to take on risk. But along the way, some investors decided that the better way to get rich was to make bets on the overall risk levels in the stock market. As investors in volatility-based ETFs learned this year, using investment strategies that rely on market anxiety can create big losses if gloom-and-doom predictions don’t come to pass.
http://jlne.ws/VAK6q2 THE VIX: Is It Telling Us Anything At All?
Cullen Roche, Business Insider
In the last 5 years several indicators have become extremely popular.  Perhaps none more so than the VIX.  That is, the volatility index.  The VIX is a measure of implied volatility for the S&P 500.  It’s also known as the fear gauge as it has a tendency to correlate decently with big moves in the market.   The only problem is that this index doesn’t tell you much except in rather extreme environments.   In fact, that might even be a stretch.
http://jlne.ws/VAIAEl  Special Dividends Can Create Special Problems
Steven M. Sears, Barron’s
Special dividends could cause special problems for options investors.
Because many put and call strike prices are adjusted lower by the amount of special dividends, many investors will unwittingly be forced to sell stocks they would rather keep because of technicalities associated with how the options market processes special dividends.
http://jlne.ws/STllsb Intrade shutdown disrupts betting market on elections, air strikes, and celebrity arrests
Adrianne Jeffries, The Verge
Intrade, the exchange that takes bets on things like who will win the US presidential election and what films will win an Academy Award, has always been a fun scene. In recent years, it became much more, as the media realized that the odds on Intrade could often predict the future.
http://jlne.ws/STmxfn Do Hedge Funds Manipulate Stock Prices?
Daniel Akst, The Wall Street Journal
It certainly looks like it, at least according to a quartet of professors who studied hedge fund data from 2000 to 2010 in order to produce a recent paper on the subject.
http://jlne.ws/STkpEm Citi Economic Surprise Indexes for U.S. and Asia-Pacific Diverge
Jared Woodard, Condor Options
Here is one explanation why so many analysts have been bullish on U.S. equities this year versus emerging markets. U.S. economic data improved more than expected in early 2012 to a much greater degree than did the data for Asia Pacific (ex Japan) countries.
http://jlne.ws/UeNqaD

Exchanges

Why exchanges face uphill swaps battle
Tom Osborn, Financial News
The narrative of the post-crisis reform agenda has long characterised exchanges as the major winners. But research from Tabb Group, published last week, suggests that the incumbent interdealer brokers may in fact hold the upper hand in the new regulatory environment.
http://jlne.ws/VAIOLM Nasdaq Buys 25% Stake in Dutch Derivatives System TOM
Nandini Sukumar, Bloomberg
Nasdaq OMX Group Inc. (NDAQ) bought a 25 percent stake in The Order Machine, a Dutch alternative securities-trading system focused on stocks and equity derivatives, as the second-largest U.S. equity market expands in the region and diversifies its business.
http://jlne.ws/STklo8 Goldman cuts CME Group to ‘sell,’ cites volume struggle
Tom Polansek, Reuters
CME Group Inc (CME.O) will struggle to rebound from low trading volumes next year, Goldman Sachs said, as it downgraded its rating to “sell” for the biggest U.S. exchange operator.
http://jlne.ws/VAIdd9 CBOE Holdings Declares Special Cash Dividend Of $0.75 Per Share
Press Release
CBOE Holdings (NASDAQ: CBOE) today announced that its Board of Directors has declared a special cash dividend of $0.75 per share on its common stock.  The dividend will be paid on December 28, 2012 to stockholders of record on December 21, 2012.
http://jlne.ws/VAJnoU
** Just in time to beat the tax man. –JB BATS Exchange Welcomes ProShares ETF
Press Release
BATS Global Markets (BATS), a leading operator of securities markets in the U.S. and Europe, today announced that ProShares, a premier provider of alternative exchange traded funds (ETFs), will list the ProShares Merger ETF on BATS Exchange.
http://jlne.ws/VAJMYA

Strategy

Bonus Time: Playing The Special Dividend Trend Through Options
JJ Kinahan, Forbes
In this season of Year End Bonuses folks can plan on another potential bonus to consider: the possibility of special dividends. As we head in to this week, this will be the last week that companies looking to pay special dividends before the end of the year will have time to do so and still get them paid before the end of 2012.
http://jlne.ws/VAIoFi

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