JLN Options: TradeWeb Launches FX Options Platform

Feb 16, 2012

Lead Stories

TradeWeb Launches FX Options Platform
LONDON -(Dow Jones)- Electronic market-maker TradeWeb Markets LLC, has introduced a multi-dealer foreign exchange options platform, its fourth derivatives marketplace, it said Thursday. The firm–owned by Thomson Reuters Corp (TRI) and 10 banks–said the new platform allows options trading in a range of strategies on major currencies and allows investors to request quotes from several dealers simultaneously. The system also offers integrated trade processing and post-trade reporting, which complies with U.S. and European regulations, the firm said.
http://jlne.ws/zYsZRo

As Volatility, VIX Heat Up, Big Traders Are One Step Ahead
By Brendan Conway, Barrons.com
If markets end up in another bout of 2011-like volatility, you’re going to hear a lot more about the CBOE Volatility Index, or VIX, and how to “trade” volatility through ETFs and ETNs. Just be aware that many sophisticated traders are already well ahead of you.  Barclays Capital‘s (BCS) Maneesh Deshpande published an analysis this week showing that more traders have been resorting to “long vega” in recent weeks. That’s derivativ-ese for saying that many big, mathematically oriented market participants were already anticipating more volatility heading into this week.
The market for options on the VIX itself — those are calls and puts to buy and sell VIX futures of various maturities — has shown that trend very robustly of late.
http://jlne.ws/xYgCy9

VIX Showing Signs Of Life As Stocks Slump
MarketBeat – WSJ By Chris Dieterich
The CBOE’s Volatility Index is up 11% at 21.70, putting it on pace for its highest close in a month. The run-up is noteworthy, especially since the stock market’s so-called fear gauge has climbed more than 10% just twice this year. Both have occurred in the last four session. The VIX uses options prices to measures expectations for future swings in the S&P 500, which is down 0.4%.
http://jlne.ws/AvDHdm

Exchanges

Anonymous-Backed Attacks Took Nasdaq Website Offline
NASDAQ and BATS stock exchanges, and the Chicago Board Options Exchange (CBOE), knocked offline earlier this week by hacktivists. Nasdaq emphasizes that stock trading remained unaffected.
By Mathew J. Schwartz InformationWeek
February 16, 2012
The websites of the Nasdaq and BATS stock exchanges, together with the Chicago Board Options Exchange (CBOE), were offline earlier this week after a hacktivist group with apparent Anonymous ties targeted them with distributed denial of service (DDoS) attacks. But while customers were intermittently unable to use some of the exchanges’ websites, all said that their trading systems weren’t affected.
http://jlne.ws/ytK6d8

NYSE purchase marks start of new strategy
By Philip Stafford – Financial Times
NYSE Euronext will take the first steps in pursuit of its new strategy following the failure of its merger with Deutsche Börse, with the purchase of a stake in Fixnetix, a fast-growing UK trading technology company.
http://jlne.ws/xuguLp

 Exchanges tap into Russian liquidity
Tim Cave, Financial News 16 Feb 2012
Two of Europe’s largest exchanges, Deutsche Börse and the London Stock Exchange, have this week announced plans to improve their provision of Russia-focused services, as European operators look to benefit from increased investor appetite for Russian liquidity. Eurex, the derivatives market owned by Deutsche Börse, today said that it would introduce new Russian derivatives contracts next month. The exchange plans to launch futures and options contracts based on the RDX USD index, a benchmark licensed by the Vienna Stock Exchange. The index tracks the performance of the 15 most-liquid Russian depositary receipts listed on the London Stock Exchange’s international order book.
http://jlne.ws/x9R4XW
CME Group Set to Cut Two Members From Giant Board
By Reuters
CME Group Inc will cut two men with deep ties to the Chicago Board of Trade from its giant board of directors in May, a nominees list showed on Wednesday. The futures exchange operator, which owns the 164-year-old Board of Trade and offers trading on assets from oil to interest rates, has the largest board at any U.S. publicly traded company. Ten of the board’s 32 current members represent the Board of Trade, beneficiaries of a deal made five years ago to grease the way for CME’s acquisition of its smaller rival. However, the CBOT’s right to those seats expires in May. The list showed the first casualties of the change will be Robert Corvino and John Pietrzak, whose terms expire this year. CME did not renominate them to the board. http://jlne.ws/yYyxmM

Technology

PDQ Exec Calls HFT ‘Great For the Market’
Traders Magazine Online News, February 10, 2012
Keith Ross, chief executive officer of alternative trading system PDQ Enterprises, spoke to Traders Magazine about high-frequency trading and issues related to rapid trading. Ross, a former options floor trader and strategist, was an early partner at Getco, an early adopter of high-frequency techniques.
http://jlne.ws/yh0W1R

Strategy

Markets Advance As Options Ex Whips Continue
Presented by Gareth Soloway February 16, 2012
This has been a classic options expiration week. Options expiration is known for whipping up and down, taking money from call and put holders. After weeks of a market that just floated higher, this week saw major up and down moves. Even the epic stock Apple Inc. (NASDAQ:AAPL) has seen a massive rise and fall this week. After a mega reversal yesterday, the markets are moving higher once again. The SPDR S&P 500 ETF (NYSEARCA:SPY) is trading at $135.48, +0.94 (+0.70%). Investors got some positive economic news this morning in the United States and Europe continues to hold up well. Light volume buyers are lifting the markets towards their double top highs from yesterday.
http://jlne.ws/zljV6j

Options Education

Listed stock options eliminate worries By MARC STERN, The Gazette February 16, 2012
This is Part 2 of a six-part series aimed at demystifying and examining listed stock option strategies. Part 1 can be found at montrealgazette.com/business
Last week I described the problems that befell AIG, Bear Stearns and Lehman Bros., which all resulted from Over-The-Counter private transactions (OTC). With OTCs, two counterparties enter into a transaction where the price is negotiated between the parties with no registration, no orderly markets, no disclosure, no pricing transparency, no margin requirements, no requirements to maintain capital reserves, etc. To this day, overseeing organizations such as the Chicago Board of Options Exchange, Bank for International Settlements, Options Clearing Commission (OCC) and the Canadian Derivatives Clearing Corporation (CDCC) have no power over OTC transaction
s. The only regulation for OTC transactions comes from the International Swaps and Derivatives Association, which is a trade association interested in advancing its own agenda.
http://jlne.ws/z4pY5H

Events

CBOE Hosts 28th Annual Risk Management Conference, March 11-13 in Bonita Springs, Florida
30 Top Professionals Present on Latest Trends in Risk Management
CHICAGO, February 16, 2012 – The Chicago Board Options Exchange (CBOE) will host its annual Risk Management Conference from Sunday, March 11 through Tuesday, March 13, 2012, at the Hyatt Regency Coconut Point Resort and Spa in Bonita Springs, Florida.
http://jlne.ws/zRcxuB

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