Commentary & Insight
Raj Mahajan, Allston Trading CEO, Talks HFT and the Business of Prop Trading
MarketsWiki.tv Raj Mahajan took the reins at Allston Trading as CEO in September 2012 and has spent a good deal of his time looking at the issue of high frequency trading (HFT). Allston has been one of the proprietary trading firms who has been willing to publicly discuss HFT, regulation and the future of that form of trading. Mahajan spoke with JLN’s editor-in-chief Jim Kharouf about HFT as well as the business challenges and opportunities for prop firms. Watch the video »
Lead StoriesVIX Bets Post Biggest Rally in 7 Weeks as S&P 500 Drops
Nikolaj Gammeltoft & Cecile Vannucci, Bloomberg
Traders who made record bets on securities that track U.S. stock volatility scored the biggest gains in almost two months yesterday as equities plunged.
The iPath S&P 500 VIX Short-Term Futures exchange-traded note climbed 12 percent to $20.52 and the ProShares Ultra VIX Short-Term Futures ETF (UVXY) soared 23 percent to $7.75, according to data compiled by Bloomberg.
http://jlne.ws/17oReMZ Despite VIX Jump, Options Investor Profits Big on VXX Decay
Kaitlyn Kiernan, The Wall Street Journal
The better tone across financial markets Tuesday is sending the Chicago Board Options Exchange’s Volatility Index lower and in the process, making one options trader a lot richer.
Early last month, one options trader placed a big multi-part bet that the Barclays BARC.LN -1.53% iPath S&P 500 VIX Short-Term Futures ETN VXX +11.22% (VXX) would continue lower in the weeks ahead.
http://jlne.ws/XRk4qp Dow Jones Industrial Average, S&P 500 Brace for a Steep Drop
Karee Venema, Schaeffer’s Investment Research
Futures on the Dow Jones Industrial Average (DJI) are trading lower this morning, as fear over the state of the global economy makes its way back to the Street. A downwardly revised growth forecast from the International Monetary Fund (IMF) is only stoking the bearish bias created by the disappointing economic data reported by China on Monday.
http://jlne.ws/17oXeoJ Investors bail out of stocks
Emily Jane Fox, CNN Money
Investors rushed for the exits Wednesday as disappointing earnings sparked a broad sell-off.
http://jlne.ws/17oZdte Insight: When options trading ahead of deals raises eyebrows
Doris Frankel, Reuters
A study for Reuters by options research firm Schaeffer’s Investment Research of 181 such announcements in the 14 months to the end of February shows that such activity prior to news of takeovers, big stock repurchases or a major investment occurs on a regular basis.
http://jlne.ws/17oRTxN Silver Got You Down? Credit Suisse Builds Income Alternative
Brendan Conway, Barron’s
Credit Suisse (CS) today launched an exchange-traded note that attempts to change the equation by adding a stream of income — by turning to the options market.
http://jlne.ws/17oZzA5 Derivatives fuel violent gold swings
Christopher Whittall, International Financing Review
As analysts continue to debate the cause of the sharpest drop in gold prices over the past three decades, traders are pointing to the role played by derivatives in aggravating the market rout.
http://jlne.ws/17oYxUS Ex-MF Global Broker Sentenced to 5 Years for Rogue Trades
Andrew Harris, Bloomberg
Former MF Global (MFGLQ) Inc. broker Evan Brent Dooley was sentenced to five years in prison for making unlawful unauthorized trades that caused the now-defunct futures firm to lose more than $141 million in 2008.
ExchangesExchanges Step Up Bid to Curb Dark Pools
Jacob Bunge, The Wall Street Journal
The three largest U.S. stock exchanges have called on regulators to craft tougher rules for private share-trading venues, in their strongest bid yet to rein in the so-called dark pools that are handling a growing portion of stock trading.
http://jlne.ws/11dRwWi IntercontinentalExchange Announces Launch of Russell 2000 Growth and Value Index Futures
Press Release (ICE)
IntercontinentalExchange (NYSE: ICE), a leading operator of global markets and clearing houses, announced today it will introduce two new Russell Index futures contracts. The contracts will be based on the Russell 2000 Growth and Russell 2000 Value Indexes and will begin trading on April 22, 2013, subject to regulatory review.
RegulationBloomberg LP Sues U.S. CFTC Over Swap Collateral Rules
Andrew Zajac, Bloomberg
Bloomberg LP sued the top U.S. derivatives regulator over rules setting higher collateral standards for swaps than comparable futures, arguing the requirements are arbitrary.
http://jlne.ws/13iM2cU Regulators report to finance ministers, central banks on OTC derivatives
Press Release (CFTC via Futures)
Today, the principals of the authorities with responsibility for the regulation of the over-the-counter (OTC) derivatives markets in Australia, Brazil, the European Union, Hong Kong, Japan, Ontario, Quebec, Singapore, Switzerland and the United States, have held four meetings to discuss reform of the OTC derivatives market.
The principals recognise that the OTC derivatives market is a global market and firmly support the adoption and enforcement of robust and consistent standards in and across jurisdictions.
StrategyThe Low-Risk Options Strategy
Mark Wolfinger, Barron’s
In a recent Striking Price column, Steve Sears and Michael Schwartz, chief options strategist at Oppenheimer & Co., came up with five rules to help investors better navigate the option markets. “The key is knowing when to take a profit and when to take a loss,” said Schwartz.
http://jlne.ws/17oT4NP Squeeze Profits From Oil With Strangles
Tyler Craig, InvestorPlace
The recent commodity collapse has claimed crude oil as one of its victims. Although oil didn’t experience nearly the same bloodbath as gold and silver, it has fallen more than 9%, breaking multiple support levels in the process.
http://jlne.ws/17oSvng Term Structure A Headwind For Dynamic VIX Hedge
Elliot Orsillo, Seeking Alpha
Back in June of last year, we first wrote about the concept of Antifragility and a promising new exchange traded product that had the potential to deliver antifragile returns.