JLN Options: VIX Continues to Burn

Sep 19, 2012

Lead Stories VIX Continues to Burn
Wall Street Sector Selector
The VIX index and VIX ETFs continue to burn and smolder alongside incredibly flat markets, as investors literally wait for markets to move a different direction other than sideways.  The VIX Index lost 2.81% to close at ’14.8,’ well below the ’20′ average mark, while the iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX) lost 2.23% to close at a ridiculous $8.86, well below many past expectations.
The VIX took hits in the last two weeks, as words from ECB President Mario Draghi and Fed Chairman Dr. Ben Bernanke about quantitative easing, interest rates, and bond buying temporarily bolstered markets and pushed fear out of the marketplace.
http://jlne.ws/T3THe0 ‘Bull Market in Fear’ — Investors Buy VIX ETFs Despite Price Decline
John Spence, ETF Trends
Volatility-linked exchange traded products hitched to VIX futures continue to languish near all-time lows following the Federal Reserve’s latest round of quantitative easing.
These hedging ETFs are depressed on a lower CBOE Volatility Index and “contango” in the VIX futures market.
http://jlne.ws/QBXABg How much bullish news can the market absorb?
Alanna Byrne, Futures
Randy Frederick, managing director of active trading and derivatives at Charles Schwab, says that recent moves by European Central Bank President Mario Draghi and Federal Reserve Chairman Ben Bernanke have “taken the majority of downside risk out of the market.”
http://jlne.ws/T46ptd New “BuyWrite ETF” Hits The Market
Michael Johnston, ETFdb
AdvisorShares added another actively-managed ETF to its lineup this week, rolling out a fund that employs a “covered call” overlay to a global asset allocation strategy. The new STAR Global Buy-Write ETF (VEGA) will hold a portfolio of exchange-traded products while simultaneously writing call options against each position. VEGA also has the flexibility to use protective put options in low volatility environments to manage downside risk. 
VEGA will be subadvised by Partnervest Advisory Services; James Herrell and Kenneth Hyman will be the portfolio managers.
http://jlne.ws/QBXWYE BGC Partners To Offer Listed Equity Options And Cash Equities Products In Australia
Press Release
BGC Partners, Inc. (NASDAQ: BGCP) (“BGC Partners” or “BGC”), a leading global brokerage company servicing the wholesale financial markets, today announced that it has been granted license to offer listed Equity Options and Cash Equities products in Australia. BGC’s latest product offering, which will launch October 1, 2012, further boosts the firm’s range of OTC and listed Equity products in the Asia-Pacific Region.
http://jlne.ws/QBZMZx

Exchanges

CME to Launch New Type of Futures Contract
Katy Burne,, The Wall Street Journal
CME Group Inc. is rolling out a new kind of interest-rate futures contract, looking ahead of new regulations that will thrust privately negotiated contracts onto open platforms like exchanges.
Under the 2010 Dodd-Frank financial-overhaul law, a large chunk of the $650 trillion market for over-the-counter transactions known as “swaps” will have to be traded on transparent venues and be routed through central clearinghouses, which guarantee trades for a fee.
http://jlne.ws/QluQML BATS says still evaluating Brazilian exchange opportunities
Reuters
BATS Global Markets, the third-largest U.S. cash equities exchange, said on Tuesday it is still evaluating opportunities in Brazil as it looks to expand into other markets.
http://jlne.ws/T3UBXV Osaka Securities Exchange Wins FOW Award for Asia 2012 for Most Innovative New Contract Launched by an Exchange – Equities and Index
Press Release
Osaka Securities Exchange Co., Ltd. (OSE) announced today that it has won a Futures and Options World (FOW) Award for Asia 2012 from FOW, a global derivatives magazine. OSE’s Nikkei Stock Average Volatility Index (Nikkei 225 VI) Futures received an award for “Most Innovative New Contract Launch by an Exchange – Equities and Index,” in the category of Exchanges and CCPs, at the awards ceremony held on September 18, 2012.
http://jlne.ws/QBZyl9

Regulation

SEC Keeps Wary Eye on Exchanges
Fining of NYSE Demonstrates Scrutiny Being Given to New Products Geared to High-Speed Traders
Jenny Strasburg and Scott Patterson, The Wall Street Journal
Exchanges are bracing for greater scrutiny from the top U.S. securities regulator as it clamps down on their efforts to bolster profits by pumping out products that increasingly have catered to high-speed traders.
The Securities and Exchange Commission, alarmed at a recent string of high-profile technology mishaps that have roiled stock markets, is homing in on exchanges’ ability to monitor their own systems.
http://jlne.ws/QBYu0O For Superfast Stock Traders, a Way to Jump Ahead in Line
Jenny Strasburg and Scott Patterson, The Wall Street Journal
Haim Bodek was a Wall Street insider at Goldman Sachs and UBS before launching his own trading firm. Now he is taking on the financial establishment that spawned him.
Mr. Bodek approached the Securities and Exchange Commission last year alleging that stock exchanges, in a race for more revenue, had worked with rapid-fire trading firms to give them an unfair edge over everyday investors.
http://jlne.ws/QBZ1zG Speed trading in Senate spotlight
Zachary Warmbrodt, Politico
Worries about rapid-fire computerized trading spooked markets again this week amid continuing questions about what regulators and lawmakers will do to address concerns about these trades.
The issue flared up Monday after a brief dip in the market for crude oil futures contracts drew scrutiny from the U.S. Commodity Futures Trading Commission, which has been working to define high-frequency trading before imposing new regulations.
http://jlne.ws/QC3Kl3
STRATEGY Selling Puts On Commodity ETFs To Profit From Inflation
David Sims, Seeking Alpha
For a few years now, market participants have placed wagers that quantitative easing by the Federal Reserve will have an impact on inflation. As employment continues to stagnate, the Federal Reserve has announced QE3. Some people are dubbing this QE-infinity due to the fact that the Federal Reserve has essentially placed no caps on the amount of stimulus this will provide the economy and appears content with extending the dates for the program until the U.S. economy is roaring.
http://jlne.ws/QC0FBn

Events

OIC Announces Investor Education Day in San Francisco September 29
Press Release
The Options Industry Council (OIC) today announced its latest Investor Education Day (IED) scheduled for September 29 in San Francisco.
The Investor Education Day offers two different tracks for attendees based on their investment experience and skill level — Options Basics or Advanced Strategies. Options Basics will examine fundamentals, such as strategies to get started and the risks and rewards of using options, while Advanced Strategies will focus on more complicated concepts such as butterflies, condors and the Greeks.
http://jlne.ws/QC00zO NYSE Euronext and CF&B Communication launch 12th Midcap Event 24 & 25 September 2012 at Palais Brongniart in Paris
Press Release
NYSE Euronext (NYX) and CF&B Communication today announced that the 12th annual Midcap Event will take place on September 24 and 25 at Palais Brongniart in Paris.
It will bring together 150 companies listed on the European market of NYSE Euronext and 400 institutional investors from around Europe.
The MidCap Event was created in 2000 to promote links and exchanges between listed companies, assisted by the brokers that track them, and fund managers likely to invest in their securities.
http://jlne.ws/T40Ued

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