JLN Options: Why VIX's Recent Plunge May Be Bad for Stocks

Jan 8, 2013

Lead Stories Why VIX’s Recent Plunge May Be Bad for Stocks
Jeff Cox, CNBC
After a historic decline, market volatility really has no place else to go but up.
In the near-term that’s probably bad news for stock prices, which have rallied in 2013 but likely are in for a rough ride over the next several weeks.
http://jlne.ws/U16L18 Optionshop, the New Online Futures Broker Specializing in Options on Futures, Opens Doors for Traders and Investors
Press Release
Optionshop, a new online futures broker specializing in options on futures, today began accepting new accounts.
http://jlne.ws/XIFmFR What to watch: Stocks’ fear gauge plunge an omen?
Adam Shell, USA TODAY
Should you be scared when Wall Street’s savvy options traders are making bets that basically send the message: “Risk? What risk?”
http://jlne.ws/XIUEdZ
** In the (in)famous words of Alfred E. Neuman, “What — me worry?” –JB Another Reason to Worry About Financial Derivatives
Mark Whitehouse, Bloomberg
The threat credit derivatives can present to the entire financial system became painfully apparent during the market turmoil of 2008. New research suggests they can also be dangerous for individual companies in normal times.
http://jlne.ws/VG40nM Risk assets slip from multi-month highs
Vivianne Rodrigues, Financial Times
Growth-focused assets headed lower, pulling major “risk” barometers back from multi-month highs, as the new year rally lost impetus and investors turned their attention to the start of the US earnings season this week.
http://jlne.ws/WJ97jJ 2012 Volume – Top 35 CBOE Options (SPX, VIX, GLD, EEM, et al.) and Investor Sentiment
Matt Moran, CBOE
I recently received a call regarding CBOE options to gain global exposure, and we discussed CBOE options on EEM, FXI, EWZ, EFA, and FXI.
The top 5 options in terms of total yearly volume at CBOE in 2012 were —
http://jlne.ws/XIQhQ4
** Also Put/Call ratios are in a table at the link. –JB Cramer: Looking past the hogwash
Jim Cramer, optionMONSTER
Every year we see some themes that seem to transcend everything out there. These themes are like rising tides: They seem to take up all boats in the water, even ones that aren’t nearly as sturdy as boats stuck in still waters or tides that are ebbing.
http://jlne.ws/Wr4Jp9 Swap Traders Close to Winning U.S. Portfolio Collateral Offset
Silla Brush, Bloomberg
U.S. regulators plan to allow hedge funds and other credit-swap traders to reduce the amount of collateral needed to back transactions through the use of accounts that offset different types of trades.
http://jlne.ws/ShPDHm That Big VIX Drop Isn’t Necessarily a Bullish Indicator
Steven Russolillo, The Wall Street Journal
While last week’s VIX slide was one for the ages, it isn’t necessarily a bullish indicator for stocks in the days and weeks ahead.
http://jlne.ws/XINJl0 Derivatives market crucial variable in exchange mergers 
FinCAD
The proposed merger of exchange operators NYSE Euronext and the Intercontinental Exchange (ICE) is a sign of the trend toward consolidation being driven by significant changes in the way markets trade and clear derivatives contracts.
http://jlne.ws/Wr0DNM

Exchanges

OPTIONS: ISE to Cut Auction Times In Half
Traders Magazine
The International Securities Exchange plans to cut the duration of its auctions to half a second, from a full second, in order to reduce its members’ exposure to adverse price moves and increase the number of auctions it runs.
http://jlne.ws/XIP4bm CBOE Unveils New Corporate Branding
Press Release
The Chicago Board Options Exchange (CBOE) has unveiled a new branding initiative, which has been introduced company-wide, including across social media platforms, marketing and communications materials and its website. The brand makeover has also been incorporated into a major new advertising and integrated marketing campaign. New York-based agency of record Stein + Partners Brand Activation developed both the branding and the advertising with CBOE.
http://jlne.ws/XIQDG8

Regulation

New Rule Could Turn U.S. Hedge Funds Into Informers on Fraud 
Reuters (via Advanced Trading)
The Financial Crimes Enforcement Network (FinCEN) is working on a rule that would require U.S. hedge funds to file formal reports notifying U.S. authorities of any suspicious trading by employees or outside parties, the regulatory agency said.
http://jlne.ws/Wr1eiE

Strategy

Protect Your Portfolio Against Volatility  
Bret Kenwell, Seeking Alpha
Previously, I had written an article about using the VIX as an indicator, rather than a trading vehicle. The VIX, or CBOE SPX Volatility Index, which measures the volatility of the S&P 500, has been crushed over the last week.
http://jlne.ws/Wr4Voj ETF Call And Put Options Explained
Cory Mitchell, ETFdb
ETFs are great portfolio building blocks thanks to the low-cost, well-diversified nature of these products. Aside from buy-and-hold investors, active traders have also embraced these financial vehicles as viable tactical tools thanks to their ease-of-use and unparalleled liquidity.
http://jlne.ws/WqZw0t

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