JLN Options: Why traders are selling calls in VXX

Oct 11, 2012

Lead Stories

Why traders are selling calls in VXX
Chris McKhann, optionMONSTER
The VXX volatility exchange-traded note is not far off last week’s all-time low, and traders apparently believe that any upside would be limited.
The iPath S&P 500 VIX Short-Term Futures ETN is down 1.16 percent to $35.57 this morning after trading down to $33.12 on Friday, a new low. The note did undergo a reverse split last week, which takes the adjusted opening price up to 1600. It climbed to a high of 1920 in February 2009 but has seen a colossal collapse since.
http://jlne.ws/R07GNH

Investors cut back on hedge funds despite rally: data
Tommy Wilkes, Reuters
Hedge fund clients pulled out more money than they put in over the past month in spite of a strong performance, in a possible sign of nerves that the parlous state of major economies could hit their returns.
http://jlne.ws/TAOPMW

The Problem With Too Many Order Types
Peter Chapman, Traders Magazine
The stock market is unnecessarily complex and the thousands of exchange order types are partly to blame.
That was a recurring frustration of industry professionals expressed during two weeks of conferences and hearings on the inner workings of markets, held in Washington and New York during September and October.
http://jlne.ws/R00S2q

New swaps rules lead to buy-side risk management changes
Anish Puaar, The Trade News
Many buy-side firms are not actively managing or hedging credit valuation adjustments, according to the latest annual survey by the Professional Risk Managers’ Association (PRMIA).
The survey looked at how market participants are likely to respond to impending OTC derivatives regulation which will lead to instruments being traded on exchange-like platforms and centrally cleared.
http://jlne.ws/R01dCe

Mutual Fund Directors Warn On Hedge-Fund Ads
Brendan Conway, Barron’s
Earlier this year, President Obama signed into law a measure allowing hedge funds to advertise to the public. You can probably guess that mutual-fund companies have watched this issue closely.
http://jlne.ws/R02c5z

FX Volume Slowing for First Time in Six Years
Tom Steinert-Threlkeld, Traders Magazine
Institutional interest in foreign exchange is tailing off around the world, except in the United States, according to research firm Celent.Growth is slowing down for the first time in six years, according to a report prepared by analyst Sreekrishna Sankar.
http://jlne.ws/WjfOLl

Exchanges

NYSE Euronext Announces Trading Volumes for September 2012 and Other Metrics
Press Release
NYSE Euronext (NYX) today announced trading volumes for its global derivatives and cash equities exchanges for September 2012[1].
Trading volumes in September 2012 were down year-over-year, but rebounded across the four principal trading venues fromlower levels recorded in August 2012.
Highlights
NYSE Euronext global derivatives ADV in September 2012 of 7.7 million contracts decreased 19.4% compared to September 2011, but increased 19.8% from August 2012 levels.
http://jlne.ws/R03z44

Technology

Interactive Data Offers Trial Data Feed for ASX
Global Custodian
Interactive Data Corporation, a provider of managed ultra-low latency infrastructure and market data services, is offering a new trial data feed for the Australian Securities Exchange (ASX) through its 7ticks network…
Clients have direct connection to a range of global futures and options, equities and FX exchanges, and trading venues for multi-asset class and ultra-low latency trading.
http://jlne.ws/R04QrV

Strategy

Is it time to short volatility?
Andrew Giovinazzi, MarketWatch
Now that the euro is temporarily safe from destruction, my mind wanders to the reasons why both the euro and the U.S. equity markets can spiral into a decline. Most of the downward momentum is based on things that might happen, as in Apple (AAPL) earnings will be awful (AAPL from $700 to $625 over the last two weeks), the IMF declares the world economy could slow down (this is news to the central banks that are lowering rates) and U.S. earning season is around the corner, and it will be awful, too. That makes a big bunch of awful when nothing has really changed fundamentally for the worse.
http://jlne.ws/R01vJg

5 Warning Signs For S&P 500 ETF In Stock Correction
Investor’s Business Daily (via NASDAQ)
After running up four months straight, the S&P 500 has fallen into a correction. ETF investors should expect traders to take profits after such a long run. While there’s no telling how much the market will fall, here are five signs that show the market is very weak.
http://jlne.ws/R073Uk

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