JLN Options: Time to Start Fearing the VIX, Again

Jun 21, 2013

Lead Stories Time to Start Fearing the VIX, Again 
Steven Russolillo – The Wall Street Journal
The market’s so-called fear gauge started showing signs of life this week, a development that historically doesn’t bode well for stocks.
http://jlne.ws/16mJYly CBOE Holdings, Inc : Volume In CBOE’s S&P 500 Index Options Beats All-Time High Set In 2010
Press Release (CBOE)
The Chicago Board Options Exchange (CBOE) today reported that trading volume in S&P 500 Index options (SPXSM) contracts on Thursday, June 20 established a new daily record of 2,282,029 contracts traded.
http://jlne.ws/130emFF New Daily Volume Record of 2,282,029 for SPX Options
Matt Moran – CBOE
A key factor impacting the record volume is the fact that yesterday was the last trading day for the June a.m.-settled SPX options. Today is the roll date for the BXM, BXY, and other CBOE benchmarks indexes.
http://jlne.ws/16mDpj2 CME Group Announces Multiple Options Volume Records
Press Release (CME Group)
CME Group, the world’s leading and most diverse derivatives marketplace, today announced a record in daily trading volume for multiple options contracts on June 20, 2013:
– Record volume in Treasury Options reached 1,706,663 (67 percent of which traded electronically on Globex) surpassing previous record of 1,321,019 set on June 19, 2013.
– Record volume in 10-Year U.S. Treasury Note Options reached 1,024,109 surpassing previous record of 898,536 set on June 8, 2007.
– Record volume in E-mini S&P 500 Options reached 809,935 surpassing the previous record of 598,764 set on April 15, 2013.
http://jlne.ws/16mExmT European futures and options volumes up 10%
John Bakie – The Trade
European futures and options volumes climbed by almost 10% in the first quarter of 2013, according to the latest figures from the Futures Industry Association (FIA).
http://jlne.ws/130fPf4 CITI: If You Think The ‘Fear Index’ Is Telling You To Buy Stocks, Then You Are Wrong
Sam Ro – The Business Insider
Global financial markets got rocked this week after Federal Reserve Chairman Ben Bernanke suggested that he could begin to taper, or gradual reduce, the Fed’s stimulative quantitative easing program.
http://jlne.ws/130gv44 Quadruple Witching Strikes on Summer Solstice
Matt Clinch – CNBC
Summer Solstice is upon us: the longest day of the year in the northern hemisphere where some religions in the western world believe the sun defeats the forces of evil.
http://jlne.ws/130gSvp Surge in ETF Trading Foretells Volatile Summer
John Spence – USA Today (via CNBC)
A surge in exchange traded fund trading this week signals that investors should buckle up for a volatile summer.
http://jlne.ws/16mGeAz The Fed Walks A Tightrope 
Alen Mattich – The Wall Street Journal
How can the United States Federal Reserve think about easing up on the monetary gas pedal when unemployment remains high and inflation is well below target? Maybe because it is becoming more worried about financial market stability.
http://jlne.ws/16mGteV Stocks React Like Junkies As Bernanke Yanks Away Low Rates
Robert Lenzner – Forbes
It’s the damnedest turnaround in the markets I’ve ever seen. For four years the Fed chairman adds monetary reserves to the system, and drives common stock prices from a sickening low of about 6600 on the Dow (down from 14,100 in October, 2007) above 15,000, and maintained interest rates so low that a delayed rise in residential home prices was finally stimulated.
http://jlne.ws/130gpcL Stocks: The Liquidity Rally Just Died
Alex Dumortier – The Motley Fool
If anyone had any doubt that this year’s rally was partially (or, perhaps, even heavily) fueled by the market’s happy hope of eternal Fed liquidity, the market’s reaction to Ben Bernanke’s announcement on Wednesday afternoon that the central bank expects to slow its bond buying this year should erase any and all of them.
http://jlne.ws/130hPUs Why are markets so surprised by the Fed shift? 
David Berman – The Globe and Mail
The U.S. Federal Reserve announced this week an upcoming policy shift that just about everyone knew was coming: As the economy heals, stimulus will be withdrawn.
http://jlne.ws/16mJOuA Mathew Gladstein, Options Guru With Merton, Scholes, Dies
Laurence Arnold – Bloomberg
Mathew L. Gladstein, a Wall Street executive who tapped the expertise of Robert Merton and Myron Scholes — future Nobel Prize-winners — in the 1970s to bring options trading to the masses, has died. He was 90.


FX Volatility Quoted Options Delisting
Press Release (CME Group)
Effective Sunday, June 23, the CME Group, Inc. (CME) will be delisting all FX Volatility Quoted
Options. See table below for complete list of products being delisted:
http://jlne.ws/14NQjYh (PDF)


Rating Rules Mean Black Fridays for Bond Volatility
Lucy Meakin – Bloomberg
Bond traders, check your calendars before heading off for the weekend.
Some Fridays will become more volatile for fixed-income investors as European Union rules implemented yesterday require rating companies to publish a calendar of dates for reviewing the sovereign credit of countries. Until now, the notices have come at random times and on random days.
http://jlne.ws/130gEEH FINRA beefs up policing of arbitrators
Suzanne Barlyn – Reuters
Wall Street’s industry-funded watchdog said it was beefing up oversight of its 6,500 securities arbitrators after one of them was criminally indicted and suspended from the practice of law but failed to properly disclose those legal run-ins.
http://jlne.ws/130hC3D U.S. Can’t Go It Alone on Derivatives
Michel Barnier – Bloomberg
Over the past five years, the European Union and the U.S. have developed separate, new regulatory regimes for derivatives, aimed at protecting our financial systems, economies and taxpayers from a repeat of the 2008 crisis. The next challenge is to use those reforms as the foundation for a single, global framework.


The psychology of trading
Ken Bailey – optionsANIMAL
There are many articles and books written on the psychology of trading. There are even counselors that specialize in helping traders improve their trading. They only address the psychology of trading, not how to pick better trades and exits. I guess that can work but I’d rather trade the way I’m comfortable with.

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