LEAD STORIES
Volatility Lowest Since ’07 in Stocks, Bonds, Currencies
By Nikolaj Gammeltoft, Liz Capo McCormick and Cecile Vannucci, Bloomberg
Apr 1, 2012
Markets for equities, bonds and currencies are the calmest they’ve been since 2007, and that’s making some investors nervous.
Options that protect against Standard & Poor’s 500 Index losses plunged 64 percent in the last two quarters, the most ever, data compiled by Bloomberg show. Interest-rate volatility is near a five-year low, while demand for hedges against extreme moves in the dollar is close to the weakest since 2008. Bank of America Corp.’s Market Risk cross-asset volatility index reached a level not seen since November 2007.
Becalmed markets have fooled investors before. The Chicago Board Options Exchange Volatility Index fell to a 13-year low of 9.89 in January 2007 before the financial crisis of 2008 wiped $37 trillion from share prices worldwide. As the gauge of options prices slipped within 5 points of that level last week following a 28 percent S&P 500 rally, demand has risen fivefold for exchange-traded products whose value increases should volatility rebound.
Volatility Lowest Since ’07 in Stocks, Bonds, Currencies
By Nikolaj Gammeltoft, Liz Capo McCormick and Cecile Vannucci, Bloomberg
Apr 1, 2012
Markets for equities, bonds and currencies are the calmest they’ve been since 2007, and that’s making some investors nervous.
Options that protect against Standard & Poor’s 500 Index losses plunged 64 percent in the last two quarters, the most ever, data compiled by Bloomberg show. Interest-rate volatility is near a five-year low, while demand for hedges against extreme moves in the dollar is close to the weakest since 2008. Bank of America Corp.’s Market Risk cross-asset volatility index reached a level not seen since November 2007.
Becalmed markets have fooled investors before. The Chicago Board Options Exchange Volatility Index fell to a 13-year low of 9.89 in January 2007 before the financial crisis of 2008 wiped $37 trillion from share prices worldwide. As the gauge of options prices slipped within 5 points of that level last week following a 28 percent S&P 500 rally, demand has risen fivefold for exchange-traded products whose value increases should volatility rebound.
THE OPTIONS INDUSTRY COUNCIL ANNOUNCES MARCH OPTIONS TRADING VOLUME FALLS 10%
CHICAGO (April 2, 2012) – The Options Industry Council (OIC) announced today that 376,246,042 total options contracts changed hands in March, 9.8 percent less than the 417,188,575 contracts traded in March 2011, the second highest monthly volume on record.
Average daily trading volume in March was 17,102,093 contracts, 5.7 percent lower than the 18,138,634 contracts in the same year ago period. Year-to-date volume for March stood at 1,061,109,209 contracts, which is 7.7 percent lower than the 1,149,883,317 contracts traded at the same point last year. This marks the second time in history that first quarter volume exceeded 1 billion contracts.
http://jlne.ws/HEXX7M
OCC announces Cleared contract Volume Declined 10% In March while Securities Lending Volume rose 18%
CHICAGO (April 2, 2012) OCC announced that cleared contract volume reached 379,763,970 contracts in March, representing a 10 percent decrease from the March 2011 volume of 421,466,054 contracts. OCC ended the first quarter with total volume reaching 1,068,689,268 contracts, exceeding 1 billion contracts in the first quarter for the second time in history. Options: Exchange-listed options trading volume reached 376,246,042 contracts in March, a 10 percent decrease from March 2011. Average daily options trading volume in March was 17,102,093 contracts, 6 percent lower than the 18,138,634 contracts in March of last year. Year-to-date options trading volume is down 8 percent from 2011 with 1,061,109,209 contracts.
NASDAQ OMX Group to Add New Options Venue
The Options Insider
On Friday, NASDAQ OMX Group Inc. (NDAQ) announced in a statement plans for a new options venue with the individual investor in mind, reported Dow Jones. According to Tom Wittman, senior vice president and head of U.S. options for NDAQ, “We are planning the launch of a new options platform in 2012 that would complement the hybrid floor-based Nasdaq OMX PHLX and the fully electronic Nasdaq Options Market. It is too early to tell the exact pricing or functionalities, but our aim is always to offer innovative market structure that improves the quality of the marketplace.”
http://jlne.ws/HBpQnq
VIX At Multiyear Lows: What's Next?
MarketBeat - WSJ
By Kaitlyn Kiernan and Chris Dieterich
A jump in option activity in the Chicago Board Options Exchange’s Volatility index suggests some investors are betting on a rocky road this quarter. After stocks completed their best first quarter ever by some metrics, options traders today have snapped up upside bets in the VIX — known as the market’s fear gauge — on the first day of the second quarter.
http://jlne.ws/HKs43f
EXCHANGES
ISE Reports Business Activity for March 2012
NEW YORK, April 2, 2012 (Press Release)
ISE was the second largest equity options exchange in March with market share of 18.3%, excluding dividend trades.
Dividend trades made up 7.8% of industry volume in March 2012.
The International Securities Exchange (ISE) today reported average daily volume of 2.7 million contracts in March 2012. This represents a decrease of 12.7% compared to March 2011. Total options volume for the month was 58.9 million contracts. ISE was the second largest U.S. equity options exchange in March with market share of 18.3%*.
http://jlne.ws/HHC9wz (pdf)
Average Daily Volume Of 10.1 Million Contracts At Eurex Group In March
MondoVisione
In March 2012, the international derivatives exchanges of Eurex Group recorded an average daily volume of 10.1 million contracts (March 2011: 11.8 million). Of those, 7.4 million were Eurex Exchange contracts (March 2011: 8.7 million), and 2.7 million contracts (March 2011: 3.1 million) were traded at the U.S.-based International Securities Exchange (ISE). In total, 163.1 million contracts were traded at Eurex Exchange and 58.9 million at the ISE.
http://jlne.ws/HIjYGV
CBOE Holdings Reports March 2012 Trading Volume
CBOE Futures Exchange Posts Busiest Month in History
CHICAGO, April 2, 2012 /PRNewswire/ -- CBOE Holdings, Inc. (NASDAQ: CBOE) today reported that March trading volume for options on the Chicago Board Options Exchange (CBOE) and C2 Options Exchange (C2), combined, totaled 106.65 million contracts. March's average daily volume (ADV) was 4.85 million contracts, even with March 2011 ADV and down five percent from February 2012 ADV of 5.08 million contracts. Futures trading on CBOE Futures Exchange (CFE), home of CBOE Volatility Index futures, set a new all-time monthly volume record of nearly two million contracts in March.
http://jlne.ws/HPbQ6Z
CBOE March Trading Volume Slips 1.1%; Market Share Up On Yr
WSJ.com
CBOE Holdings Inc.'s (CBOE) average daily trading volume of options at its namesake exchange slipped 1.1% in March, while its market share edged up compared with its year-earlier level. March's average daily options volume of 4.62 million contracts fell from 4.67 million a year earlier and also declined from February's 4.84 million level. CBOE's market share of total U.S. options-industry volume in March was 27%, up 1.2 percentage points from a year earlier but down 0.7 points from the month before.
http://jlne.ws/HKsYMW
March Is Record Setting Month at CBOE Futures Exchange
Volume of Nearly Two Million Contracts is New All-Time High, Numerous Trading Records Set During Month
CHICAGO, April 2, 2012 /PRNewswire/ -- The CBOE Futures Exchange, LLC (CFE) today announced that March 2012 was the most-active trading month in CFE history as volume totaled 1,971,632 contracts, an increase of 85 percent from the 1,066,367 contracts traded in March 2011. Average daily volume (ADV) at CFE during March 2012 reached a new all-time high of 89,620 contracts, a gain of 93 percent from the 46,363 contracts traded per day a year ago. March's record trading volume surpassed the previous high of 1,828,511 contracts traded in August 2011.
http://jlne.ws/HIfTCy
STRATEGY
Options: More Protective Trades on Industrial Sector
By Brendan Conway, Barrons.com
Options traders are taking a cautious approach to the Industrial Select Sector SPDR (XLI) on a day when stocks are heading higher and the DJIA is at its highest intraday level since late 2007. The tracker of stocks like General Electric (GE), United Parcel Service (UPS) and United Technologies (UTX) is up 0.8% to 37.70 in Monday afternoon trading. But as investors enjoy stocks’ bullish second-quarter kickoff, the options market’s activity in put options fits with the recent cautious-looking trend, according to a report by Susquehanna Financial Group.
http://jlne.ws/HaFoyL
OPTIONS EDUCATION
OIC ANNOUNCES LAUNCH OF REDESIGNED WEBSITE
CHICAGO (April 2, 2012) - The Options Industry Council (OIC) today announced the launch of its redesigned website at www.OptionsEducation.org. The new website features completely updated design, improved navigation, an expanded strategies section, social media integration, and allows all visitors to register for access to additional industry-leading education, research and customized learning tools. The new OIC website is also a consolidation of three websites that previously targeted individual investors, financial advisors and institutional investors. Considerable user research suggested that by merging these sites, OIC would have the opportunity to greatly simplify access to content for all audiences while broadening the overall educational experience for everyone. Through this improved design, OIC continues to provide many of the same vital tools, classes, podcasts, and videos developed with two decades of options education experience.
http://jlne.ws/HCSUtJCHICAGO (April 2, 2012) - The Options Industry Council (OIC) today announced the launch of its redesigned website at www.OptionsEducation.org. The new website features completely updated design, improved navigation, an expanded strategies section, social media integration, and allows all visitors to register for access to additional industry-leading education, research and customized learning tools. The new OIC website is also a consolidation of three websites that previously targeted individual investors, financial advisors and institutional investors. Considerable user research suggested that by merging these sites, OIC would have the opportunity to greatly simplify access to content for all audiences while broadening the overall educational experience for everyone. Through this improved design, OIC continues to provide many of the same vital tools, classes, podcasts, and videos developed with two decades of options education experience.
