Lead Stories
Volatility Notes Hit Multiple Circuit Breakers as Shares Swing
Callie Bost – Bloomberg
Two securities tied to stock volatility that normally trade tens of millions of shares a day were repeatedly halted Tuesday by exchange circuit breakers after experiencing unusual swings.
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Return of Goldilocks Has UBS Asking If It Gets Better Than This
Simon Kennedy – Bloomberg
Does it get any better than this?
That’s the question Larry Hatheway, UBS Group AG’s chief economist, is asking about financial markets.
His answer: Probably not.
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Bond Traders Find Answer to Broken Market: Switch to Currencies
Lisa Abramowicz – Bloomberg
Just because it’s getting harder to trade bonds doesn’t mean that investors are sitting on their hands.
Instead, they’re turning to currencies, which are largely bought and sold electronically rather than through dealers, according to Joyce Chang, the global head of research at JPMorgan Chase & Co. in New York…
In contrast, turnover in global currencies surged at the end of 2014 and has continued increasing in 2015, according to data compiled by JPMorgan that comprised spot trades, forwards, currency swaps, foreign exchange and options in the biggest world markets.
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The Stock Market in 2015 is Starting to Look Remarkably Similar to the Stock Market in 2008
Michael T. Snyder – SmarterAnalyst
Are we watching a replay of the last financial crisis? Over the past six months, the price of oil has collapsed, the U.S. dollar has soared, and a whole bunch of other patterns that we witnessed just before the stock market crash of 2008 are repeating once again. But what we have not seen yet is the actual stock market crash. So will there be one this year?
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Sorting Out VXX the Best We Can
Adam Warner – Schaeffer’s Investment Research
I was tweeting up and back the other day about the iPath S&P 500 VIX Short-Term Futures ETN (VXX) with a currency guy, and it occurred to me that now that it’s the “it” product again, we better refresh our nuts and bolts — and what better time to talk VXX than April Fools’ Day? So, here’s a transcript of an interview I conducted with … myself:
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A New Hedge Fund Haven: Asia-Pacific
Chief Investment Officer
Asia-Pacific hedge funds are leading the race to gain new assets and grow existing money through investment returns, new data has shown.
Sector assets in the region grew by 30% in 2014, according to Preqin, as growth in more established global centres remained in the low single-digit percentages.
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JPMorgan Names Wemyss Global Head of FX Options Replacing Ellery
Hugh Son and Ambereen Choudhury – Bloomberg
JPMorgan Chase & Co. named Robin Wemyss as global head of foreign-exchange options after James Ellery’s decision to leave the bank.
Wemyss is retaining his role as head of foreign-exchange options for Europe, Middle East and Africa and will report to Claudia Jury and Pranav Thakur, global co-heads of currencies and emerging markets, the New York-based bank said Tuesday in an internal memo.
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Exchanges
ICE Benchmark Administration Completes Transition to New ISDAFIX Calculation Methodology; Benchmark Renamed ICE Swap Rate
Press Release – ICE
Intercontinental Exchange (NYSE:ICE), the leading global network of exchanges and clearing houses, today announced that ICE Benchmark Administration (IBA) has completed the transition to a new calculation methodology for ISDAFIX, the global benchmark for interest rate swaps, which has been renamed ICE Swap Rate, effective April 1, 2015.
On March 31, 2015, IBA transitioned ICE Swap Rate from a submission-based rate using inputs from panel banks to a benchmark calculated from tradable quotes displayed on regulated trading venues requiring no expert or subjective judgment.
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Regulation & Enforcement
Futures Industry Pushes Back on Position Limits
MarketsMedia
The futures industry is pushing back against the U.S. Commodity Futures Trading Commission’s proposed rules on position limits for futures and swaps. It’s concerned that the proposed non-spot month limits likely will have unintended harmful consequences on the derivatives markets, including reduced liquidity for bonafide hedgers and impairment of efficient price discovery.
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Allston Said to Face CFTC Probe Into Alleged Manipulation
Matthew Leising and Silla Brush – Bloomberg
High-frequency trading firm Allston Trading LLC is under investigation by the U.S. Commodity Futures Trading Commission for alleged market manipulation, according to a person familiar with the matter.
The regulator has subpoenaed CME Group Inc. for information on Chicago-based Allston, said the person, who asked not to be named because the matter is private. Through an arbitration process at exchange operator CME Group, Allston was accused last year by a rival, HTG Capital Partners LLC, of misleading competitors through an illegal practice known as spoofing.
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Technology
Managing derivatives risk through the cloud
Hedgeweek
We are speaking over coffee in the club lounge of Level39 at 1 Canada Square, Canary Wharf; a hot-bed of innovation in what is Europe’s largest technology accelerator for start-up companies, spanning everything from financial technology to cyber security and retail technology.
At the heart of the Derivitec model is the ability to analyse a portfolio of derivatives exclusively via the web, with no need for users to go through the time and ongoing costs of a system install. This is about leveraging the cloud to optimize portfolio risk management.
No other risk management firm is taking this approach; especially one as focused as Derivitec is on derivatives risk.
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Strategy
Time to consider playing the flickering SPY
Georgio Stoev – Tradingfloor.com
Equities can provide for some anxieties as the major indices continue to fluctuate, with big swings up and down. In this volatile market, investors can often find themselves in and out as the market ebbs and flows. For directional option traders, that could be especially painful.
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Trading the oil pullback: 5 plays on volatility
CNBC
As uncertainty reigns in oil trading, investors should look to profit on up-and-down movement in the commodity, CNBC “Fast Money” trader Pete Najarian said.
The CBOE Crude Oil Volatility Index jumped more than 3 percent on Tuesday and is up 179 percent in the last year. It sat just below $54 on Tuesday and if it falls below $50, options in the index could be a profitable play, Najarian said.
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How You Can Guard Against Volatility
Sara Shore – MarketRealist
Investors are well aware that market ups and downs are back, as we’ve discussed at length here on The Blog. But, as Sara Shores explains, there is a strategy you can implement that can help you weather the storm.
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Education
Is It Possible To Trade Bitcoin Options?
Kushal Agarwal – Investopedia
Bitcoin has become an avenue for investments and trading. Investors and speculators alike have been flocking to get a piece of the pie, and a large number trading platforms and exchanges has made investing and trading in bitcoins easily accessible. Among the various possible financial instruments one can trade or invest in are options. One might ask if it is possible to trade options on bitcoins. Why wouldn’t it be? The first bitcoin call option was sold on December 9, 2009, and the first put option was sold on the April 12 the next year. Options on bitcoin are not only a great way to insure from the volatility if one is holding bitcoins but also a lucrative way to make money from the volatility in bitcoin’s value.
There are two options trading scenarios for bitcoins: vanilla options and binary options.
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Volatility Indexes: Oil OVX (Part Of A Series)
Darrell Martin – Benzinga
Chances are if you are an oil trader (CL) you may not have known that there is a Volatility Index that can help you in your trading.
It is available on CBOE.com.
The OVX is defined there as measuring “the market’s expectation of 30-day volatility of crude oil prices by applying the VIX methodology to United States Oil Fund, LP (USO) options spanning a wide range of strike prices.”
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READ MORE: JLN Options: Volatility Notes Hit Multiple Circuit Breakers as Shares Swing; Return of Goldilocks Has UBS Asking If It Gets Better Than This; Bond Traders Find Answer to Broken Market: Switch to Currencies.