Breaking News

Options Clearing Corp shakes up senior management; American Shale Companies’ Rush to Hedge Is Turning the Oil Market Upside Down; A Market Under Distribution Has No Mercy

Lead Stories

Options Clearing Corp shakes up senior management
Tom Polansek – Reuters
The primary clearinghouse for U.S. options trades named new finance and compliance chiefs on Friday in the latest C-suite shake-up aimed at improving oversight. The Options Clearing Corp, known as OCC, also said it had hired a former CME Group Inc (CME.O) executive to fill a newly created treasurer’s position. The changes are part of an overhaul in leadership as OCC works to bolster the way it manages finances and risk after its regulator, the U.S. Securities and Exchange Commission, raised concerns in recent years.
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American Shale Companies’ Rush to Hedge Is Turning the Oil Market Upside Down
Javier Blas, Alex Longley and Alex Nussbaum – Bloomberg
Oil futures curve flattens as producers hedge 2017-2019 output; WTI options volume surged to record after OPEC announced cut
U.S. shale oil companies are using the post-OPEC rally to hedge their oil price risk for next year and 2018 above $50 a barrel, bankers, merchants and brokers said, pushing the forward oil curve upside down.
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A Market Under Distribution Has No Mercy
Bob Lang – CBOE Options Hub
After a robust market rise on good turnover after the election, we find ourselves a month later wondering what is next. Many thought a Trump victory was indeed the elixir needed to get the economy and markets moving, and that sentiment was pronounced immediately with a bullish market response. Further, bonds were trashed, an amazing allocation shift that happened swiftly and with bold strokes.
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Italy opts for the status quo, but investors should brace for volatility
FTSE Global Markets
The No vote in the Italian referendum did not come as a surprise and was already broadly priced into markets, but we may still see volatility given the uncertainty over what happens next—and over the broader political implications of the result. Beyond the immediate market reaction, there may be broader consequences for Italy’s financial system, and for the country’s banks in particular, writes Maria Paola Toschi, global market strategist, JP Morgan Asset Management.
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Behind the Mad Dash for VIX Put Options
Schaeffer’s Research
In the wake of the presidential election, as the S&P 500 Index (SPX) and its index peers soared to record highs, the CBOE Volatility Index (VIX) — or the market’s “fear barometer” — naturally plummeted from post-Brexit peaks. What’s more, amid the skyrocketing optimism, put buying on the VIX surged to a pace not seen since September 2015, according to Schaeffer’s Quantitative Analyst Chris Prybal.
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Europe Stock Volatility Bets Unravel After Italian Vote Outcome
Aleksandra Gjorgievska – Bloomberg
Traders who had pushed up the cost of hedging against swings in European stocks to a four-year high are unwinding their bets as Italy’s referendum result dispels some of the uncertainties gripping the region.
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The Option Queen Newsletter
Jeanette Young and Jordan Young – The Option Queen
The bulls are running wild on Wall Street as investors scramble to figure out which stocks will benefit most from a Trump Presidency. Clearly, infrastructure stocks will benefit and would have benefited from the election of either candidate, both of whom agreed on the need to fix our aging systems.
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Exchanges

CBOE Holdings Reports November 2016 Trading Volume
Press Release – CBOE
CBOE Holdings, Inc. (NASDAQ: CBOE) today reported November monthly trading volume and average revenue per contract (RPC) data on its website under the Quotes & Data section.
The data sheet, with a complete overview of November trading volume for CBOE Holdings, including Chicago Board Options Exchange (CBOE), C2 Options Exchange (C2) and CBOE Futures Exchange (CFE), can be found at www.cboe.com/monthlyvolrpc.
For the month, S&P 500 Index (SPX) and CBOE Volatility Index (VIX Index) options at CBOE set record volume in non-U.S. trading hours with total combined volume of 296,472 contracts, topping the previous record of 144,983 contracts from December 2015.
Several single-day records were set in non-U.S. trading hours this November. VIX options reached a record 89,322 contracts on November 4, while SPX options and VIX futures reached new all-time highs of 41,218 contracts and 263,663 contracts, respectively, on November 9.
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OCC cleared contract volume rises 20% on heightened market volatility
FTSE Global Markets
Heightened market volatility resulting from anticipated interest rate increases from the US Fed and the US presidential election, alongside global macro considerations, have contributed to rising options volume last month reports the Options Clearing Corporation (OCC), but average daily options volume is still under last year’s levels.
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Intercontinental Exchange reports ICE & NYSE November 2016 statistics
ICE
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today reported November 2016 trading volume and related revenue statistics, which can be viewed on the company’s investor relations website at http://ir.theice.com/ir-resources/supplemental-information in the Monthly Statistics Tracking spreadsheet.
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NCDEX launches NextGen trading system for market development
CNBC Moneycontrol
National Commodity and Derivatives Exchange Ltd. (NCDEX), India’s leading commodity exchange, today announced the launch of NextGen – a new trading and surveillance system that will bring greater convenience, speed, safety and transparency to the market.
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It Will Not Be Long Before The New Agricultural Commodity Trades On The Futures Market
Andrew Hecht – Seeking Alpha
It has been a long time since a futures exchange has introduced a highly liquid new trading instrument in the world of commodities. The last one that comes to mind is natural gas futures. Therefore, it has been over twenty-six years. However, with an accent on the word highly, marijuana might just fit the bill when it comes to an agricultural product that would attract not only attention but price volatility and speculative interest. Additionally, the result of the recent election creates a need for hedging for the growing number of growers of pot plants across the United States.
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Regulation & Enforcement

US faces further regulatory uncertainty
Julie Aelbrecht – Futures & Options World
CFTC’s various regulatory reforms over recent years have been called into question by Trump’s shock win in November
The election of Donald Trump as 45th president of the United States has at once cast a shadow over the US regulatory establishment and encouraged hope of weaker regulations within the US financial markets. As with any change in administration, the future of regulation is uncertain, but during the 18 month-long campaign, the president-elect has shown himself a staunch opponent of financial regulation. His transition team also pledged to ‘dismantle’ the post-crisis financial reform Dodd-Frank Act two days after the election, prompting speculation about the effects of this and other rollbacks on the markets.
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Technology

BlackRock Solutions Integrates ICE Data Services’ Continuous Evaluated Pricing Tool
Press Release – Intercontinental Exchange
Intercontinental Exchange (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced that ICE Data Services’ Continuous Evaluated Pricing (CEP) has been integrated into BlackRock Solutions’ Aladdin risk and enterprise investment system. Aladdin is the premier portfolio management system for investment managers that combines sophisticated risk analytics with comprehensive trading and position monitoring tools on a single platform.
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Strategy

Market bull uses an unusual method to bet on the market rising even higher
Rebecca Ungarino – CNBC
One trader sees signs that stocks are set to keep rallying—and he has an interesting maneuver for how to profit off of his prediction. The S&P 500 has enjoyed “a very nice uptrend,” but over the past week, “we’ve begun to pull back,” Todd Gordon of TradingAnalysis.com said Friday on CNBC’s “Trading Nation.”
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Education

The Election is Over, Now What?
OIC
With the election on November 8 behind us, have you thought about how the bulls, bears, elephants and donkeys will affect your portfolio and investments? The Options Industry Council’s Webinar Summit brings together a power-packed group of thought leaders to help you navigate the political and economic landscape and discuss how the outcome of the election relates to exchange-listed options.
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About Author

Bergstrom is chief information officer of John J. Lothian & Co. He edits MarketsWiki and JLN Options.