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JLN Options: Senator questions widespread tax dodges used by wealthy; Hedge fund failures not enough to stop asset inflows in 2015 – survey; How Unusual is the Current Volatility Lull? Newsletter,Options

Lead Stories Senator questions widespread tax dodges used by wealthy Mark Schoeff Jr. – Investment News The top Democrat on the Senate tax-writing committee called Tuesday for curbing complex investment tactics that help high-net-worth investors lower their taxes. A report released by the Democratic staff of the Senate Finance Committee outlined several investment instruments — such as options, derivatives and swaps — that can be used to skirt “tens of billions of dollars” in taxation. It asserted that reining them in through legislative and regulatory changes would make the tax code fairer. jlne.ws/1AILF9J ***DA: Ask 100 people to define “fair…

My Realization: BOX and VolX Team Up to List Options on RealVol SPY Index Blog,Commentary,Options

Doug Ashburn

When assessing actual exposure in the market, why does the listed world use measures of implied volatility? That is the question VolX CEO Bob Krause asks to anyone who will listen. Why, he wonders, is the listed derivatives market dominated by the VIX, a measure of 30-day volatility expectations? The standard in the OTC market, by contrast, is the variance swap – a contract where the payoff is in terms of actual movement in the underlying (“realized volatility” if you will). He says the OTC market is doing it right, in that participants are hedging actual market exposure with actual…

John Lothian Newsletter: Singapore Exchange Forging Ground in Derivatives; Regulators to MF Global: Make customers whole over mishandled funds; China Extends Forwards, Swaps Trading to Three More Currencies John Lothian Newsletter,Newsletter

First Read Bits & Pieces by John J. Lothian Happy Boxing Day! Today is the day employers give gifts to their employees, or something like that. Being an American, I normally think of boxing as something one does with gloves in a ring. But Happy Boxing Day, nonetheless. I also think of this day for something that happened on December 26, 2002. That was the day the Wall Street Journal’s Peter A. McKay wrote a story about me with a dot drawing titled “Analyst or Broker? Critic Draws Criticism.” Well, the broker thing is no longer true, but the analyst…

Small Caps Coming Up Big: Russell’s Pat Fay on the One-Year Anniversary of the CBOE Russell 2000 Volatility Index Options,Video

Investors have been flocking to equities lately, but the interest in small caps is apparently outpacing that in large caps, measured by closing prices for the RVX compared to large cap implied volatility as measured by the VIX prices. The CBOE Russell 2000 Volatility Index (RVX) futures contract was launched on November 18, 2013. One year later, JLN caught up with Patrick Fay, director of listed derivatives for Russell Investments, at FIA Expo Chicago, to talk about the RVX index and small cap volatility. Small cap volatility has always tended to be higher than large cap volatility, but this gap…

JLN Financials: Addendum to the CME Gold Futures Story; Sovereign Bonds Head for Two-Week Decline on Fed Policy; The only two words that will matter at the Fed Blog,Financials,Newsletter

First Impressions Addendum to the CME Gold Futures Story Sarah Rudolph – JLN The lead story in yesterday’s John Lothian Newsletter was a Reuters report that said CME Group is planning to launch a gold futures contract in Hong Kong by year end. We were a little uncertain about how this would work, since the CME does not have an exchange located in Hong Kong, so we spoke with the CME about it. According to a CME spokesman, the news was announced by the CME’s managing director of metals products, Harriet Hunnable, during the China Gold Congress this week in…

Index Evolution: Guillermo Cano Looks at the New Generation of Equity Indexes Financials,Interview,Options,Video

Russell Indexes has long been known as “the small-cap company,” due to the success of its flagship Russell 2000, which is comprised of the smallest 2000 stocks by market capitalization. These firms’ market caps range from roughly $129 million to $2.6 billion, as of May 2013, and represent the bottom two-thirds of the 3000 largest publicly held firms in the U.S. According to Guillermo Cano, Senior Product Manager at Russell Investments, the firm has evolved considerably since its start in 1984. In fact, equity indexes in general have come a long way in recent years. “The indexes we created in…

Happy 10th Anniversary, VIX Futures! Commentary,Options

Today is the 10 year anniversary of the launch of VIX futures, traded at the CBOE Futures Exchange (CFE). CFE has achieved tremendous success with these futures, based on its proprietary CBOE Volatility Index (VIX). It has also expanded into other volatility-based products, as volatility as an asset class has exploded in recent years. There are currently eight VIX-related contracts traded on the CFE. But the CBOE still thinks of VIX futures as a relatively new product, with much more to come in the near future. Jim Lubin, senior managing director of CBOE Futures Exchange, said the past few years…

Vol Spike: CBOE Futures Exchange’s Jay Caauwe Introduces the Short-term Volatility Index Interview,Options,Video

In February 2014, the CBOE Futures Exchange began listing contracts on the short term volatility index (VXST) – a 9-day variant of its flagship 30-day VIX futures. In an interview with John Lothian News Editor-At-Large Doug Ashburn, CFE’s Jay Caauwe discusses the launch of VXST, the rationale behind the listing of VXST futures and which participants and strategies will be prevalent. “There are volatility moments where the 30-day product does not get you the action or return you are looking for,” says Caauwe. “If we look at August 2011, when S&P downgraded the U.S., VXST spiked to the neighborhood of…

JLN Options: Look Out Vix, Treasury Volatility Falls on Speculation Fed to Maintain Policy, Implied Volatility and the Debt Ceiling Crisis Newsletter,Options

Lead Stories Look Out Vix, Here Comes a New Way to Measure Volatility Yahoo! Finance Scott Nations, founder and CIO of NationsShares has a new product coming that he says is a better tool for tracking volatility and the way people on Wall Street really think of it. VolDex is an exchange he’s created that strips away the more obscure derivatives and measure the meat and potatoes options linked to the S&P 500 itself using the SPDR ETF. http://jlne.ws/1akON4q***DA: I am dying to know how measuring the volatility of meat and potatoes will help me gauge the market. Treasury Volatility…