JLN Options: STOXX 50’s put/call ratio hits 7-month high

Aug 24, 2012

NOTE:  To the right is a quick poll asking readers when they would prefer to see this blog published.  Currently it publishes around 3p (CST).  Just select your preference and click on “Vote”.  Thanks!

Lead Stories

STOXX 50’s put/call ratio hits 7-month high
The put/call ratio of Euro STOXX 50 (Zurich: ^STOXX50E – news) options jumps to a seven-month high above 2, signalling a surge in investors’ appetite for protection, as stocks experience their first serious pull-back in a month.

European shares head for first weekly loss in 3 months
A leading index of European shares dipped on Friday, on track for its first weekly decline in 12 weeks, dented by commodity and banking stocks on persistent concerns over the euro zone’s debt problems and the outlook for the global economy.

Emerging-Market Stocks Fall to 3-Week Low on Earnings
Stephen Gunnion and Sridhar Natarajan, Bloomberg
Emerging-market stocks fell the most in three weeks on signs the global economic slowdown is worsening as orders for capital goods in the U.S. slipped and HSBC Holdings Plc cut its 2012 growth forecast for China.
The MSCI Emerging Markets Index (VXEEM) slid 0.9 percent, the biggest slump since Aug. 2, to 965.44 by 11:13 a.m. in New York. Steelmaker Usinas Siderurgicas de Minas Gerais SA led decliners on Brazil’s Bovespa stock index. Gauges in China and South Korea slumped more than 1 percent. Pegatron Corp. (4938) fell to a one-month low in Taipei, leading declines in technology shares, after saying it expects computer shipments to fall.

History Says Market Volatility Will Rise Before Election
Avi Salzman, Barron’s
Barclays analyst Barry Knapp unearthed some statistics this morning that might be worth noting as we all prep for election season. Market volatility, as measured by the CBOE Volatility Index (VIX), tends to spike before an election where the incumbent is viewed as vulnerable.

OptionMonster Daily Volatility Report with Jamie Tyrrell of Group1 Trading:


TSE’s Osaka Deal Marred by Share Fall, Regulator Scolding (Japan)
Kana Nishizawa and Yoshiaki Nohara
The Tokyo Stock Exchange Group Inc.’s purchase of its Osaka rival is off to a rocky start.
Just one day after winning control of Osaka Securities Exchange Co., the president of Japan’s biggest bourse and three other executives had their pay docked after the company was reprimanded by regulators for computer errors that disrupted trading twice in the last seven months. Shares of the Osaka exchange plunged by a record 16 percent yesterday amid speculation the merger will hurt profit.

Nasdaq options restores normal routing with NYSE
Kaitlyn Kiernan, MarketWatch
Nasdaq OMX Group Inc.’s three options exchanges stopped sending orders to one of NYSE Euronext’s options exchanges Friday morning.
Nasdaq declared “self-help” against NYSE Euronext’s Amex options exchange starting at 9:44 a.m. EDT, according to a series of alerts sent out by Nasdaq. Normal routing was restored beginning at 12:31 p.m. EDT. Exchanges can declare “self-help” when another market is slow to respond to incoming orders, or if the flow of information is disrupted.
** Obviously a bit dated by the time you read this it is still worth noting its occurrence. –JB

CME to Strengthen Footprint in UK
Zacks Equity Research
Beginning this week, CME Group Inc. (CME) unveiled its point of action that it is in advanced level of applications with UK’s Financial Services Authority (FSA) to build a derivative exchange in London – CME Europe Ltd. However, the implementation of the plan is subject to regulatory approval.
**  No longer “new” news it is still interesting to read various takes on what it all means. –JB

CBOE, C2, CFE, and CBSX Trading Schedule for Labor Day Holiday
Press Release (Full Text)
CBOE Holdings, Inc. (NASDAQ: CBOE) today announced the following trading schedule for Chicago Board Options Exchange (CBOE), C2 Options Exchange (C2), CBOE Futures Exchange (CFE) and CBOE Stock Exchange (CBSX) in observance of the Labor Day holiday:
– Friday, August 31:     CBOE, C2, CFE and CBSX will have regular trading hours for all products.
– Monday, September 3:     CBOE, C2, CFE and CBSX will be closed.

Toronto Stock Exchange, TSX Venture Exchange, Montreal Exchange, TMX Select and Alpha closed for Labour Day
Press Release (Full Text)
Toronto Stock Exchange, TSX Venture Exchange, Montreal Exchange, TMX Select and Alpha will be closed on Monday, September 3, 2012 for the Labour Day holiday. Natural Gas Exchange (NGX) will operate on a reduced trading schedule from 8:30 a.m. – 12:00 p.m. (MDT).
The Exchanges will re-open and resume regular trading on Tuesday, September 4, 2012.


Straw That Broke SEC Vote
Andrew Ackerman and Kirsten Grind, The Wall Street Journal
For Luis Aguilar, the last push persuading him to vote against new rules on money-market funds came while he was on vacation. By early August, the Securities and Exchange Commission member learned that SEC Chairman Mary Schapiro’s office gave lawmakers a report on the risks of money funds that he viewed as misleading.


Downward Volatility: Avoid the Temptation of the VIX
Ari Charney, InvestingDaily
With the VIX still trading near the 52-week low of 13.30 it hit last Friday, it may be tempting to go long on volatility via one of the VIX-linked exchange-traded products (ETP). After all, the extreme complacency suggested by the VIX as of late rarely persists for long. And with the market trading near five-year highs, it’s only a matter of time before downward volatility reasserts itself, perhaps sometime after Labor Day, when Wall Street’s trading desks are fully manned again after the lull of the summer vacation season.

Monitoring Implied Volatility Is Critical For Option Traders
J. W. Jones, Daily Markets
One of the hallmarks of an options trader is the ability to reach into his trading tool bag and pull out different trading vehicles in order to accommodate the current market situation.
With few exceptions, a major component of any strategy our trader would select includes selling option premium. Premium sales usually are selected in out-of-the-money strikes where the time (extrinsic) premium constitutes 100% of the price received.

John Lothian Newsletter

We visit more than 100 websites daily for financial news (Would YOU do that?)

“John Lothian and Company… our industry intelligence.”

Rick Lane

CEO, Trading Technologies

Past Options Newsletters

Seeing red: tricky times in the markets

Seeing red: tricky times in the markets

$34,126/$300,000 (11.4%) ++++ Lead Stories Seeing red: tricky times in the markets Stefan Wagstyl - Financial Times As investors we like to think we're acting rationally, even though there are mountains of evidence to show that, all too often, we're not. A successful...

Pin It on Pinterest

Share This Story