JLN Options: Options Week in Review

Apr 4, 2013

The long-standing battle over the CBOE‘s exclusive right to offer products based on its license agreements with Standard & Poor’s and Dow Jones indexes may end up before the U.S. Supreme Court, if Citadel and the ISE get their way.  The Court is expected to review a petition next month from ISE to hear the case, which Citadel has joined, the Wall Street Journal reported. Illinois courts have ruled in CBOE’s favor. The Supreme Court only hears 75 to 80 cases out of about 10,000 submitted, according to the Journal. If it decides to review this case, that could make for some nervousness at CBOE, whose SPX options on the S&P 500 are one of the most heavily traded contracts in the U.S.

The iPath S&P 500 VIX Short-Term Futures ETN (NYSEArca: VXX) is down 36% year to date but is still seeing high demand from investors looking for a hedge against a downturn in the stock-market, according to ETF Trends.  Investors have pumped almost $700 million into the ETF. The VXX fell 77.6% last year even as the S&P 500 rallied, yet more than $2.3 billion flowed into the ETN in 2012, according to IndexUniverse data.

The CBOE Volatility Index (VIX) dropped about 30% in the first quarter as the S&P 500 started out the year with a surprising 10% rally, Russell Rhoads reported in TheStreet.

Raymond James has launched a strategic options desk in New York to offer volatility as an individual asset class and give its clients hedging and alternative investment strategies, Citywire reported. The team will be led by managing directors Ryan Sylvester and Adam Templeton, who report to senior managing director Dan McMahon.

CBOE Futures Exchange said it would expand its trading hours for CBOE VIX futures in two phases beginning this May. The current hours are 7:00 a.m. CT to 3:15 p.m. CT.  Phase one is designed to meet demand from U.S. customers for a post-settlement trading period. Phase two will allow European customers to trade VIX futures during their local trading hours.

Nasdaq OMX Group Inc. shares declined the most since Nov. 2008 the day after it announced the acquisition of eSpeed, the electronic bond trading platform, Bloomberg reported.  The company will buy eSpeed from BGC Partners Inc. for as much as $1.23 billion.  Nasdaq OMX sees eSpeed as a core asset that will allow the exchange operator to expand into other areas of fixed income, according to its CEO Robert Greifeld.

Trading volume in VIX futures hit a new all-time high for the third consecutive month, the CBOE reported. Total exchange-wide trading reached a new all-time record as well. 

ISE reported an average daily volume of 2.4 million contracts in March 2013, a decrease of 11.7% compared to March 2012.

The Options Industry Council announced that average daily options volume in March declined 9 percent from last March. YTD average daily volume was down 3.2 percent compared to the first quarter of 2012.

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