JLN Options: Options Week in Review Jan. 17, 2013

Jan 17, 2013

The CBOE plans to revamp its 15-member board to make it more independent, in line with its rivals NYSE Euronext, Nasdaq OMX and ICE, whose board members have no direct ties to trading firms. The restructuring is part of the exchange’s response to an SEC investigation stemming from alleged violations of securities laws by a unit of OptionsXpress, the Wall Street Journal reported. The board changes were not requested by the SEC. The CBOE’s CEO Bill Brodsky, who will step down as CEO and let Edward Tilly take over in May, said the exchange has no plans for a merger at the moment, Crain’s reported.

VIX futures open interest hit a record high of almost 450,000 contracts for the second day in a row, as VIX-related products continue to be a big money-maker for the CBOE and for the CBOE Futures Exchange, which had its busiest year ever in 2012.

Active “put” options protecting against market declines were near a multi-year low, as investors saw less of a need to buy protection, according to the Wall Street Journal. The SPY exchange-traded fund, which tracks the S&P 500, fell 6 cents (less than 0.1 percent) to $147.02 on Friday. Covered call trading continued a nearly uninterrupted streak of profits, Market Playground reported.

A report from the CFA Institute recommended that companies improve their corporate disclosures on hedge accounting and derivatives trading because the disclosures are currently too opaque for investors to understand the real risks those activities pose for companies, WSJ.com reported.

The Consolidated Audit Trail is “in limbo”, according to Traders Magazine, as the date by which the securities industry must come up with a plan to create it keeps getting extended. The new target is eight months after the deadline the SEC set for delivering the National Market System plan that arose from the Flash Crash of May 6, 2010.

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