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JLN Options: Fear Gauge Sees Stock Volatility Abating Even Further Newsletter,Options

Lead Stories Fear Gauge Sees Stock Volatility Abating Even Further  Kaitlyn Kiernan, The Wall Street JournalThe spread between reality and expectations is widening.Lately, actual volatility in the Standard & Poor’s 500-stock index has been higher than the volatility implied by readings on the Chicago Board Options Exchange’s Volatility Index. The gap between the two metrics is the largest positive divergence between the two readings since December 2011.http://jlne.ws/10lgMpZ Bobcat Goldthwait Demonstrates VolatilityRussell Rhoads, CBOEThe industry standard for measuring market volatility is the CBOE Volatility Index better known as VIX.  One of the behaviors of VIX is that it tends to revert to…

JLN Options: CBOE expects to be fined by SEC for regulatory shortcomings Newsletter,Options

Lead Stories CBOE expects to be fined by SEC for regulatory shortcomingsAnn Saphir, ReutersCBOE Holdings Inc expects to be fined as much as $10 million to resolve a probe by federal authorities into its duties as a self-policing organization.http://jlne.ws/11TeLUj Option Player’s ‘Iron Condor’ Sees Range-Bound Dow Fund  Kaitlyn Kiernan, The Wall Street JournalAs the Dow looks set to finish above 15000 for the first time, one options trader set up an “iron condor” to bet the blue-chip index would remain range bound over the next seven weeks.http://jlne.ws/15q2JYX Dow Climbs Above 15,000 on Stimulus Optimism, EarningsInyoung Hwang, BloombergU.S. stocks rose, sending the…

JLN Options: Are Options Used to Cheat on Takeovers Using Insider information? Yeah, I think so… But Let me Prove it. Newsletter,Options

Lead Stories Are Options Used to Cheat on Takeovers Using Insider information? Yeah, I think so… But Let me Prove it. Ophir Gottlieb, LivevolIn my opinion, the use of options to garner unfair (read: illegal) financial gains through the use of private/insider information is a legitimate phenomenon that is identifiable on a case-by-case basis (read three articles included below as heuristic examples), as well as in a broader analysis.Bottom line, yeah, the cheaters are using options. Or so I think…http://jlne.ws/11fZ5zq Hedge Fund Survey: ‘Findings Are Troubling’Larry Doyle, Wall Street PitEarly last year the US Attorney for the Southern District of New…

JLN Options: BOX ‘JUMBO’ SPY OPTIONS WIN SEC APPROVAL Newsletter,Options

Lead Stories BOX Offers Jumbo SPY(Press release via email)The BOX Options Exchange announced today it received SEC approval to offer Jumbo SPY to its customers. SPDR S&P 500 ETF (SPY) is currently the most widely recognized ETF in the U.S. and tracks one of the most popular indexes in the world, the S&P 500 Index. Jumbo SPY Options are a new options contract overlying 1,000 SPY ETF shares per contract, as compared to 100 shares per contract for standard options. BOX expects to start trading Jumbo SPY on Friday, May 10. The approval order can be found at  http://www.sec.gov/rules/sro/box/2013/34-69511.pdf US…

JLN Options: High-Frequency Trading Is ‘Basically Evil’: Munger Newsletter,Options

Lead Stories High-Frequency Trading Is ‘Basically Evil’: MungerPaul Toscano, CNBC (via Yahoo Finance)Events in Europe are a great example of bankers gone wild and you simply can’t trust them, said Warren Buffett’s right-hand man Charlie Munger.http://jlne.ws/10x8N94**Munger goes after more here than just HFT.  As regards HFT John Lothian News recently interviewed Raj Mahajan, Allston Trading CEO, who has a different take on HFT than Munger does. Go here to watch the video (not taking sides here, merely offering a counterpoint). –JB CBOE outage won’t limit listing of stock-index options: new CEOAnn Saphir, ReutersThe Chicago Board Options Exchange outage that blocked…

JLN Options: Investors Spooked Ahead of Big Data Days Look to Put Options Newsletter,Options

Lead Stories Investors Spooked Ahead of Big Data Days Look to Put Options Kaitlyn Kiernan, The Wall Street JournalWith key U.S. employment data looming Friday, a pair of central bank policy meetings this week and major stock benchmarks at record highs, options traders are getting defensive.Options traders are zeroing in on short-term contracts that protect against declines in the SPDR S&P 500 exchange-traded fund and the iShares Russell 2000 Index Fund.http://jlne.ws/12WkAST CFTC Commissioner Proposes Derivatives Transaction Fee  Jamila Trindle, The Wall Street JournalCommodity Futures Trading Commission member Bart Chilton plans Wednesday to propose a transaction fee for derivatives markets, an idea that…

JLN Options: Options Markets are Being Overly Sensitive Newsletter,Options

Lead Stories Options Markets are Being Overly SensitiveJared Woodard, Condor OptionsOne of the most important market signals over the last five years has been the slope of the VIX futures term structure. In quiet, bullish markets, short term option premiums are significantly lower than longer-dated implied volatility; when risk scenarios roil markets, the term structure flattens and then steepens in the other direction.http://jlne.ws/18l3j65 Derivatives Help Mask Equities Pain at NYSE Euronext  Tim Cave, The Wall Street JournalJeff Sprecher, ICE chief executive, has obviously done his homework.When he made his bid for NYSE Euronext NYX +0.14% in December, he said the Liffe…

JLN Options: CBOE Working to Resolve Incorrectly Sent Trades – Exchange Newsletter,Options

Lead Stories CBOE Working to Resolve Incorrectly Sent Trades – Exchange Jacob Bunge, The Wall Street JournalThe Chicago Board Options Exchange said “numerous” trades from Thursday appeared in its system after Friday’s market close, potentially leaving customers with incorrect positions.http://jlne.ws/ZLV5EM About that Friday Turnaround in the Price of GoldBrendan Conway, Barron’sGold’s price is rising Monday and has reached as high as $1,478, a peak since April 12.Friday, the metal’s price took a turn lower for no obvious fundamental reason. Here’s more color on the midsession turnabout from Susquehanna Financial Group – specifically on the alleged role of options-market activity:http://jlne.ws/Zgs4N3 Twitter…

JLN Options: Options leaders opposing tax reforms and transaction tax Newsletter,Options

Commentary & Insight Options leaders opposing tax reforms and transaction taxBy Jim Kharouf Options exchange leaders at the Options Industry Conference in Las Vegas voiced strong opposition to proposed tax reform and transaction tax proposals. Steve Crutchfield, who heads NYSE Arca and NYSE AMEX, said that the proposal at tax reform would issue a tax on regular retail investors who are looking to cover their stock positions. The 60/40 tax treatment is also under fire, under the proposal. Crutchfield said that the proposal is “a severe deterrent to investors to manage their risks.” “Just buying some downside protection while I…