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Category Archives: Options

Options news updates from John Lothian News.

Cboe Letter on Improving VIX Settlement Process; Matrix Executions’ High Touch Trading Desk for Options Standard

Lead Stories Letter from Cboe CEO Ed Tilly and President Chris Concannon regarding VIX activity Cboe Over the past 25 years, the Cboe Volatility Index (VIX) has become the leading, global indicator of market volatility for the marketplace. It could only achieve this status through the support of our Trading Permit Holders and their customers, other market participants, our clients and investors. /goo.gl/Jr95w3 ****SD: More on this from a couple of sources below, but if you want a TL;DR – Cboe is working to make the VIX settlement better but does not acknowledge any manipulation. A longer TL;DR – Cboe…

It’s a Scary Time to Be Trading Wall Street’s Fear Index Standard

Observations & Insight Cybersecurity and Technology Upgrades – John Davidson, OCC JohnLothianNews.com The OCC is in the process of making what is a big decision for a systemically important financial market utility (SIFMU) – how to best upgrade a tech stack responsible for clearing millions of options and futures contracts daily. In this video from JLN’s annual series with industry leaders, OCC President and Chief Operating Officer John Davidson talks about how the OCC is weighing its cloud vendor options, addressing cybersecurity concerns and the regulatory initiatives on the road ahead. Watch the video and read the rest here »…

NASDAQ’s Longfin options tangle; Creative FX trades; Manipulation talk Standard

Lead Stories Now NASDAQ gets in a tangle Jamie Powell – Financial Times Last month we published a story on Longfin, a Nasdaq listed trade-finance company with a tenuous link to blockchain technology and hence an excessively high market capitalisation. To recap, FTSE Russell decided to add Longfin to its Russell 2000 and 3000 small-cap indexes. Index funds then bought shares for their various products. There was one problem though. /goo.gl/7p4WD7 ****SD: “Tomorrow, 26,951 of Longfin put options will expire, representing 2,695,100 shares as each options contract is for 100 shares. In other words, the rights to sell account for…

VIX concerns; Europe vol gauge manipulation “unlikely” Standard

Lead Stories VIX Rigging Talk Erupts on Wall Street After Another Wild Swing Lu Wang, Elena Popina and Luke Kawa – Bloomberg The Cboe Volatility Index is how Wall Street measures anxiety. Lately it’s the gauge’s own plumbing that’s making people nervous. /bloom.bg/2HcVuMX ****JB: Financial Times story on same subject here. Bloomberg Daybreak has a video describing the action here. Manipulation of Europe’s stocks volatility gauge ‘very unlikely’ Reuters Any manipulation of Europe’s main gauge of stocks volatility would be “very unlikely”, France’s financial markets regulator said in a research note on Thursday, following allegations that the equivalent U.S. “fear…

VIX settlement surge; Reinventing equity collars; Melt-up elation for volatility gauges Standard

Observations & Insight The Week Thus Far – In Case You Missed It Spencer Doar – JLN MIAX plans to launch its third exchange, MIAX Emerald, in Q1 2019. Cboe announced it would begin disseminating a one year VIX calculation (VIX1Y) and that it is “exploring the development of a futures contract” on that index. Speaking of the VIX, it took a stroll south of 15 yesterday. Then this morning – settlement time – it went on a 30 minute run from 15ish to 17, again bringing up talk of manipulation. See the lead Financial Times story below about that…

MIAX Announces New Exchange; Cboe’s New 1-yr VIX; Strong options volume Standard

Observations & Insight MIAX Sees Green Spencer Doar – JLN The Spread episode linked to below is already missing big news! The 15 exchange-strong U.S. equity options market is getting another younger sibling from the same group – MIAX – that brought the market its 15th exchange. Named Emerald (see what they’re doing here?), the exchange is scheduled to open in Q1 2019 and will “fill a market structure niche not currently offered by the MIAX Exchange Group.” This is yet another step in MIAX’s ever-increasing presence in the options space. According to the monthly Options Liquidity Matrix (link in…

FINRA Sweeps BDs for VIX-Linked Products Info; Earnings Season Catalyst to Crush Volatility Again Standard

Observations & Insight Treasury Pushing For Capital Rule and Volcker Changes Jim Kharouf – JLN The US Treasury Department is addressing capital intensive rules that have constrained market participants from capital markets to community banks under the Volcker rule. Craig Phillips, counselor to US Treasury Secretary Steven Mnuchin, speaking at the WFE IOMA conference in Chicago last Friday, said the department is looking at a variety of issues and challenges for market participants, ranging from restrictive leverage ratios and how those are calculated, to easing restrictions on banks and institutions in the capital markets to promote liquidity, to changes in…

OCC Re-Elects Craig Donohue as Executive Chairman Standard

Observations & Insight The Future of Exchanges Will Feature More Collaboration, WFE Report Says Jim Kharouf – JLN Exchanges will have to spend more, share more and collaborate more in the coming years, according to a published report from the World Federation of Exchanges (WFE) and Oliver Wyman. The report, issued on Thursday at the 35th IOMA: The WFE’s Clearing & Derivatives Conference in Chicago focused on the recent trends for the exchange, CCP and market infrastructure providers since the 2008 financial crisis. /jlne.ws/2HwdDlQ ++++++ Editor’s Notes Our next episode of The Spread will be posted Monday. According to FIA…

How a volatility virus infected Wall Street Standard

virus

Lead Stories How a volatility virus infected Wall Street; The collapse of a few small funds in February helped fuel a terrifying stock-market slide. Why? Robin Wigglesworth – Financial Times Music teacher Chris Pomrink was driving between two lessons outside Philadelphia, when a friend called with some distressing news: “Hey Chris, XIV is in trouble.” Pomrink, 30, checked his trading account. It was February 2 and XIV — an arcane, fiendishly complex financial security that he had sunk $2,500 into earlier that week — had indeed taken a beating. The “exchange-traded note”, or ETN, which allowed traders to bet on…