Options Traders Already Casting Eyes on September Fed Meeting
Kaitlyn Kiernan – The Wall Street Journal
It’s still July, but options traders are already looking ahead to September.
The focus is the Federal Reserve’s policy-setting meeting Sept. 17-18, a meeting that some in the market believe could bring a decision by the central bank to scale back on its easing efforts. That, options traders think, could also bring a surge heightened moves in the stock market.
Stocks barely budge as investors wait for Fed
Katie Lobosco – CNN Money
U.S. stocks barely moved Tuesday, as investors cautiously awaited the latest from the Federal Reserve and Friday’s monthly jobs report.
Low volatility shapes buy-side options strategy
The Trade USA
More precise usage of options by US asset managers reflects a less-volatile trading environment and has jumpstarted interest in specific instruments, such as weekly options, an annual report from consultancy Tabb Group has revealed.
Videocast: Time decay hits VIX trades
The secret small-cap warning sign
Alex Rosenberg – CNBC
Small-cap stocks have had an incredible year. The Russell 2000, the small-cap index, is up 23 percent so far in 2013, easily besting the S&P;, the Nasdaq and the Dow. But judging by options prices, that outperformance will not endure.
‘Barron’s’ ETF Special Report Misses the Mark
Roger Nusbaum – The Street
This weekend Barron’s ran several articles that combined to make an ETF special report, but there were gaps in some of the ideas expressed that should be clarified to promote better understanding of the product.
UBS Currency-Trading Revenue Dropped as Volatility Hurt Options
Lucy Meakin – Bloomberg
UBS AG (UBSN), the fourth-largest currency trader, said revenue from its foreign exchange business fell in the second quarter due to increased price swings in the market.
NYSE Euronext Profit Exceeds Estimates on Derivatives
Nandini Sukumar & Whitney Kisling – Bloomberg
NYSE Euronext (NYX), the U.S. exchange operator being bought by IntercontinentalExchange Inc., reported second-quarter earnings that beat analysts’ estimates as revenue from derivatives trading rose and costs fell.
CME Group Announces Launch of KC HRW Wheat Short-Dated New Crop Options
Press Release (CME via The Wall Street Journal)
CME Group, the world’s leading and most diverse derivatives marketplace, today announced the launch of Short-Dated New Crop Options on KC Hard Red Winter (HRW) Wheat futures. Pending CFTC review, these new short-dated options will be available for trading on the Chicago trading floor and CME Globex on Monday, August 26, 2013. These products will be listed with and subject to the rules and regulations of the KCBT.
IntercontinentalExchange Announces August 12 Launch of 25 New Oil and Freight Futures Contracts
Press Release (ICE via The Wall Street Journal)
IntercontinentalExchange (NYSE: ICE), a leading operator of global markets and clearing houses, today announced the introduction of 25 new oil and freight contracts on August 12, 2013.
The new contracts, which will be available for trading at ICE Futures Europe and cleared at ICE Clear Europe, include 24 global crude oil, gasoline, middle distillate, fuel oil and ethanol futures and options contracts and one wet freight futures contract.
U.S. Accuses JPMorgan of Manipulating Energy Markets
Jessica Silver-Greenberg – Dealbook
The nation’s top energy regulator on Monday formally accused JPMorgan Chase of manipulating energy markets, foreshadowing a multimillion-dollar settlement that is expected as early as this week, according to people briefed on the matter.
Why Corzine Must Be Held Accountable
Daniel P. Collins – The Huffington Post
Regulators, much like the media, tend to overreact to problems when the failure falls at their feet. The media tends to obsess on a story that they initially missed. With regulators, they tend to write proscriptive rules in an attempt to solve a problem that can be partially laid at their doorstep, one in which they missed but in an attempt to deflect blame they create new regulations to prevent the situation from repeating itself.
GPS jamming: Out of sight
EVERY day for up to ten minutes near the London Stock Exchange, someone blocks signals from the global positioning system (GPS) network of satellites. Navigation systems in cars stop working and timestamps on trades made in financial institutions can be affected. The incidents are not a cyber-attack by a foreign power, though. The most likely culprit, according to Charles Curry, whose firm Chronos Technology covertly monitors such events, is a delivery driver dodging his bosses’ attempts to track him.
**Not options related and barely markets related I know but thought this was pretty interesting and worth passing around. -JB
The One Thing You Must Know Before Buying European Options
Tina Orem – InvestingAnswers
A European call option gives the buyer the right, but not the obligation, to purchase 100 shares of a particular underlying stock at a specified strike price only on the option’s expiration date.
That’s a big difference. Not knowing that could cost you big-time when you want to exercise the options.
**A co-worker recently explained to me this is not as big of a deal as it sounds because people in the US rarely exercise an option before the expiration date (mainly because the option itself has time value and exercising early would see you lose that money). There are other reasons too. On the whole early exercise of an option is not all that common. Exceptions usually are related to dividends or interest rates (and lately interest rates have not been an issue on this count). -JB
Cheaper Protection for Portfolios
Mark D. Wolfinger – Barron’sTry these less expensive alternatives to put options to hedge against stock declines.
Crude Pullback Spells Options Opportunity
Tyler Craig – T
yler’s Trading (via InvestorsPlace)
If you’re disappointed because you missed July’s monster breakout in crude oil, cheer up — black gold might well be providing a second chance to play it for additional upside.
The Risk That Should Keep VIX Shorts Up At Night
Michael Nau – Seeking Alpha
I’ll say it loud, I’m a VIX short and proud. Short VIX products such as ProShares Short VIX Short-Term Futures ETF (SVXY) or VelocityShares Daily Inverse VIX Short-Term ETN (XIV), or puts on long VIX products such as iPath S&P; 500 VIX Short-Term Futures ETN (VXX) or Ultra VIX Short-Term Futures ETF (UVXY) seem like a great bet. The mean-reverting nature of the VIX coupled with the fact that VIX futures are usually in contango mean that a short VIX strategy will probably deliver outstanding returns into the future.