JLN Options: Spike in trading volume: Blame a witches’ brew of options expirations

Mar 18, 2013

Lead Stories Spike in trading volume: Blame a witches’ brew of options expirations
Kate Gibson, MarketWatch
Friday’s spike in trading volume has virtually nothing to do with the market’s recent advance to multi-year highs, and everything to do with an event that comes just four times a year.
http://jlne.ws/ZmYpDz Mini-options debut in five large names
Chris McKhann, optionMONSTER (via Yahoo Finance)
Today marks the start of trading in the new mini-options, which will give smaller traders access to contracts on some of the more expensive and popular stocks.
http://jlne.ws/11afogn Volatility Traders, Gold Bulls Are Loving The Mess in Cyprus
Brendan Conway, Barron’s
The fast money is eager for a selloff, and many gold investors continue to fear systemic threats to the market. The surprise seizure of Cypriot bank deposits fits the bill for now. Monday morning, five of the top 10 U.S. premarket gainers were volatility-themed exchange-traded funds and notes. The gains are smaller in the regular session, but gains nonetheless.
http://jlne.ws/11adSuE Goldman expects S&P 500 to rally even more
Polya Lesova, MarketWatch
Forget panic over a new chapter in the euro-zone crisis, courtesy of a reviled Cyprus bank bailout. Goldman Sachs expects the S&P 500 index, which has rallied nearly 9% so far this year, to keep climbing.
http://jlne.ws/11am3XP Trading Hearings Put Focus Back on JPMorgan’s Chief
Ben Protess and Jessica Silver-Greenberg, Dealbook
Jamie Dimon, the influential chief of JPMorgan Chase, watched from New York on Friday while in Washington his top lieutenants were questioned by a Senate panel over a multibillion-dollar trading loss.
http://jlne.ws/Yk2wB4 Insurers explore exchange-traded funds to boost yield
Louie Woodall, Risk.net
As insurers look for new opportunities to increase the yield on their investment portfolios, exchange-traded funds could provide an efficient way to diversify and gain exposure to areas such as emerging markets and commodities. ETF providers are expanding their range of products, but insurers are cautious.
http://jlne.ws/134XKfk Traders Short Junk-Bond ETFs as Gains Top 100%: Credit Markets
Lisa Abramowicz & Mary Childs, Bloomberg
Wall Street’s biggest credit brokers are for the first time using exchange-traded funds as a way to wager that junk bonds are overvalued.
http://jlne.ws/11alaOZ SAC’S Plotkin Said to Have Been Tipped by Analyst
Patricia Hurtado, Bloomberg
A convicted SAC Capital Advisors LP analyst at the center of a federal criminal probe of insider trading passed inside information to SAC fund manager Gabriel Plotkin, according to internal e-mails and two people familiar with the matter.
http://jlne.ws/11akRDR

Exchanges

ISE Signs Licensing Agreement with KSM, the Largest Israeli ETF Issuer
KSM ETF will Track ISE Water Index   
Press Release
The International Securities Exchange (ISE), a leading U.S. options exchange, announced today a licensing agreement with KSM Sal Indices Certificates Ltd., the largest ETF issuer in Israel. The agreement licenses the ISE Water Index to KSM for its Water Fund.  The ISE Water Index is recognized by Morgan Stanley Smith Barney’s Global Investment Committee as the best investment idea for 2012, and has been named one of its top investment ideas for 2013. Ice blames SEC as it drops single-name CDS clearing plans  
Matt Cameron, Peter Madigan, Joe Rennison, Risk.net
Ice Clear Credit has shelved plans to clear single-name credit default swaps (CDSs) for clients of its member firms, as a result of a new Securities and Exchange Commission (SEC) policy on portfolio margining.
http://jlne.ws/15W7rKK CME Group Launches European Swap Clearing Service
Michelle Price, Dow Jones Newswires (via Fox Business)
CME Group Inc. (CME) on Monday launched its long-awaited European interest-rate swap clearing service, triggering a three-way contest in the region to handle the most-heavily traded over-the-counter derivatives.
http://jlne.ws/ZE5zCq

Regulation

Committee Wants Common CCP Rules
Traders Magazine
Since central clearing parties will now process most over-the-counter derivatives transactions, every CCP should understand each other and how firms conduct business.
http://jlne.ws/Yk1HYN High-Frequency Firms’ Wash Trades Need U.S. Review, Chilton Says
Silla Brush, Bloomberg
High-frequency trading firms conduct transactions with themselves in ways that distort liquidity in derivatives markets and warrant regulatory review, according to U.S. Commodity Futures Trading Commission member Bart Chilton.
http://jlne.ws/XkXHUO Mary Jo White Spins the SEC’s Revolving Door
William D. Cohan, Bloomberg
One of the oft-repeated justifications for why Wall Street must be regulated by Wall Streeters is that what goes on there is both so complex and so essential that only those who have been part of it can be trusted to oversee it.
http://jlne.ws/Yk1WmJ

Strategy

Options Point to Big Market Move 
Steven M. Sears, Barron’s
But the direction will depend on what earnings season brings. What to do if you’re a bull…or a bear. Why straddles and strangles haven’t worked.
http://jlne.ws/ZUR1y4 Overbought, Overvalued Stock Market Peak: Time To Book Profits
Richard Henry Suttmeier, Forbes
Stocks are trading under the influence of a reconfirmed Dow Theory Buy Signal with new all time closing highs set on the Dow Industrial Average and Dow Transportation Average at last Thursday’s closes at 14,539.29 and 6281.29 respectively.
http://jlne.ws/ZE9FKQ

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