JLN Options: Options Week in Review Feb. 14, 2013

Feb 14, 2013

That’s entertainment: options traders were bullish on Comcast Wednesday after the company announced its 4Q results and said it would buy General Electric’s stake in NBCUniversal for $16.7 billion. The biggest position in Comcast options was a call spread looking for shares to add between 6% and 25% through Jan. 2015. Comcast will now control “everything top to bottom”, the Wall Street Journal quoted Mark Sebastian, OptionPit’s COO, as saying.

Reuters reported that the CBOE might consider going private “if doing so benefits its shareholders,” while MarketWatch reported that CBOE’s president, Ed Tilly, said the exchange’s parent had not considered taking the company private and that such a move would not have been “logical”  – all after reports this week that Nasdaq OMX Group had discussed the idea of going private with Carlyle Group. Carlyle had approached Nasdaq about a deal but the talks fell apart, according to the Wall Street Journal.

VIX was at a 73-month low, Seeking Alpha reported, saying that the index’s seasonality gives some clues to when investors might make some money buying VIX calls or long VIX ETFs.  In an average year, the VIX has seasonal lows in early and late February and then spikes higher in early March.

The OIC announced that Meyer Frucher, aka Sandy, will receive the Joseph W. Sullivan Award at the annual Options Industry Conference this year. The Award recognizes outstanding contributions to the U.S. options market. This year, the conference is April 24-26 in Las Vegas.

OptionsCity Software announced that its Metro trading and market making platform was named the Best Options Trading Platform by the Wall Street letter at the 2013 Institutional Trading Awards, the second consecutive win for Metro in that category.

Representative Dave Camp (R-MI), chairman of the House Ways and Means Committee, released a draft of a proposal that would tax financial derivatives, including options, on a mark-to-market basis instead of the current “realization-based” system, according to an opinion piece in the New York Times Dealbook.  Currently, an option holder would not pay tax on the appreciation in value of an underlying stock until the options were sold or, if exercised, until the underlying were sold.  The proposal would require the option to be valued at the end of each year based on what the profit would be if the option had been sold and repurchased at year-end. If the option declined in value, the holder would have a tax loss. Victor Fleischer, a professor at the University of Colorado Law School, writing in Dealbook, argued that the proposal is a good one; that it would “simplify the tax code, increase fairness and align tax law better with the underlying economics.”

Speculators were back to buy precious and base metals futures and options traded on Comex and Nymex, Kitco News reported. The rise in long positions was partly spurred by a rise in prices of gold, silver, platinum, palladium and copper.

The MIAX Options Exchange (MIAX) became the newest member of The Options Industry Council. It was also the latest to join the growing roster of U.S. options exchanges.  Although the exchange’s owner is Miami International Holdings, MIAX’s operations are in Princeton, New Jersey. The company does have a conference center and additional executive offices in Miami, Florida, however.

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