SEC Targets Illicit Options Trades Made Ahead of Telecom Deal; Regulator freezes assets in accounts linked to suspicious activity
Chris Dieterich – WSJ
If you’re trading on inside information, maybe be a bit more discreet? The Securities and Exchange Commission on Friday announced a court order to freeze assets in brokerage accounts that made suspicious, windfall-reaping options trades ahead of an acquisition announced last week. At issue are short-dated, out-out-of-the-money calls bought days before Liberty Interactive announced its acquisition of General Communication, a telecom provider.
Markets Aren’t Normal and Neither Are You
Thomas Preston – The Ticker Tape
When you get test results from an annual physical, the word “normal” is music to your ears. But “normal” also implies there’s a “not normal,” with all sorts of attendant judgments and the specter of medical TV dramas. Maybe that’s why traders become traders. We see the world differently. We’re not normal—in the best sense. To us, “strangle” is something we trade. And “net liquidating value” has nothing to do with happy hour. So, no surprise here: theoretical assumptions that underlie much of market and options theory—e.g., market returns are normally distributed—aren’t always right. Traders get that. Going deeper, traders never forget that our assumptions are constantly challenged.
VIX Index Soars in Warning to Trump’s Bull Market
Charles Bovaird – Investopedia
Several volatility gauges—including the CBOE Volatility Index (VIX)—jumped sharply last week, pushing higher as global investors respond to rising geopolitical risk in nations such as North Korea and Afghanistan, according to CNBC. Amid this turmoil, the Standard & Poor’s 500 Index and the Dow Jones Industrial Average both fell to their lowest levels in two months, Google Finance data reveals.
Feds Arrest Former Susquehanna International Group Engineer For Theft Of Trading Code
Nathan Vardi – Forbes
A high-frequency trading software developer was charged on Thursday by Joon Kim, the acting U.S. Attorney in Manhattan, with attempting to steal quantitative trading code from a secretive financial firm based in the Philadelphia area that specializes in making markets for options.
Bullish Oil Bets Gain on Signs OPEC Cuts to Outdo U.S. Boom
Mark Shenk – Bloomberg
Money managers’ WTI net-longs increase for second week: CFTC; WTI oil tops $53 a barrel; U.S. crude supply drops from record
OPEC is finally making some headway in its race against the tide of surging U.S. supplies, and speculators are giving the group greater credence.
OCC Names David Hoag as Chief Information Officer
Press Release – OCC
OCC, the world’s largest equity derivatives clearing organization, today announced that David Hoag, a technology executive with nearly 25 years of information systems and development experience, will join OCC as Senior Vice President and Chief Information Officer, effective May 1st. Hoag, who will report to John Davidson, OCC’s new President and Chief Operating Officer, succeeds Luke Moranda, who becomes Senior Vice President and Senior Information Technology Advisor to the President and COO.
CFE Delayed Open in ETH on 4-12-17-Explanation
A new software version was applied to the primary CFE trade server on Sunday 4/9/17 prior to the 5:00pm CT start of trading. Sporadic order book complaints and systems errors (less than 10) occurred Monday 4/10/17 through Tuesday 4/11/17 at 3:15pm CT. CFE backed out the new software version at 4:00pm CT on Tuesday 4/11/17 by failing over to the secondary server which was running the prior software version.
Regulation & Enforcement
Wall Street banker Cohn moving Trump toward moderate policies
James Oliphant and Svea Herbst-Bayliss – Reuters
In a White House marked by infighting, top economic aide Gary Cohn, a Democrat and former Goldman Sachs banker, is muscling aside some of President Donald Trump’s hard-right advisers to push more moderate, business-friendly economic policies.
Trump to Nominate Quarles for Fed’s Top Regulatory Post, Source Says
Robert Schmidt and Jennifer Jacobs – Bloomberg
President Donald Trump plans to nominate Randal Quarles, a senior Treasury official in the Bush administration, to be the Federal Reserve’s top banking regulator, according to a person familiar with the selection process.
Profiting From the Stock Market’s Latest Fears
Steven M. Sears – Barron’s
More people are Googling World War III than at any time since 2004.
The concern is understandable. North Korea is rattling a potential nuclear saber. Russia is upset with the U.S., and the U.S. is upset with Russia, North Korea, and an evil man in Syria who gasses children. Europe’s political system is adrift. France might elect a far-right candidate. The new U.S. president, Donald Trump, has no history or experience in foreign or domestic policy. And last week, the U.S. dropped a massive bomb on caves in Afghanistan that Washington says were sheltering Islamic State terrorists.
Last week could cause traders to question bull market’s mojo
Is the bull market losing its mojo? Not only is the S&P 500 below its 50-day moving average for the first time since November. It also just chalked up consecutive losing weeks for the first time since mid-January. All told, the index slid 1.1 percent between Friday, April 7, and Thursday, April 13. (There was no trading on the 14th in observance of Good Friday.)
Position Sizing: Sticking to What’s Relevant
Thomas Preston – The Ticker Tape
The market in 2017 won’t be like the market in 2016, which wasn’t like the market in 2015. Sure, there might be similarities. But what makes each market true to itself is perpetual uncertainty. To handle this ride as a trader, you need to keep learning, investigating, and evolving. Acquire as much knowledge as you can. And most of all, learn to apply that knowledge correctly.
Why This Week Will Be Pivotal for VIX
Todd Salamone – Schaeffer’s Investment Research
After a couple weeks in which the CBOE Volatility Index volatility futures crept higher, it finally arrived last week — a VIX pop, coincident with headlines on the geopolitical front and perhaps other lingering uncertainties, as set forth immediately above.
Portfolio Margin Part 2: Greeks
Thomas Preston – The Ticker Tape
More leverage using portfolio margin (PM) means you need to bump up your risk management a few notches. And that means it’s a good idea to be sensitive to price changes. Now is a good time for a refresher course on the greeks—theoretical metrics that describe how things like stock price, time, and volatility “vol” can impact option prices. Though there are five greeks in all, we’ll cover the four most critical here—delta, gamma, theta, and vega.
Vol Whisperer: VVIX and Skew
Jayanthi Gopalakrishnan – TD Ameritrade
Fear is as much a part of modern trading as macroeconomics. But don’t let those fears haunt your trading dreams. Two lesser-known market measures can help self-directed traders get a deeper understanding of risk and what makes the market jumpy.
Congressman Thomas Reed to Speak at 2017 Options Industry Conference
Press Release via BusinessWire
OCC, the world’s largest equity derivatives clearing organization, today announced that Congressman Thomas Reed (R-NY 23rd District) will be a featured speaker on May 10th at the 2017 Options Industry Conference. Congressman Reed and OCC Executive Chairman and CEO Craig Donohue will have a “fireside chat” about the outlook for Congressional action in 2017 and significant items on the Hill’s agenda as they relate to the U.S. listed equity options industry.