| May 01, 2017 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Trump Says He's Considering Moves to Break Up Wall Street Banks
Jennifer Jacobs and Margaret Talev - Bloomberg
President Donald Trump said he is actively considering breaking up giant Wall Street banks, giving a push to efforts to revive a Depression-era law separating consumer lending and investment banking. "I'm looking at that right now," Trump said Monday in an interview with Bloomberg News in the Oval Office. "There's some people that want to go back to the old system, right? So we're going to look at that."
jlne.ws/2po86WZ
***JB: It would not surprise me if he is shorting stocks before he says things like this.
Most VIX Analysis Is Outright Nonsense
Steven M. Sears - Barron's
Last Monday the CBOE Volatility Index, or VIX, declined 25% in reaction to the French presidential election. The move was dramaticÂand it generated a nauseating amount of meaningless commentary. If more people realized the VIX is basically designed to move in the opposite direction of the Standard & Poor's 500 index, the cottage industry that breathlessly comments on the fear gauge would implode under the weight of its own nonsense.
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****SD: This mimics a conversation I had last week at the FinTech Exchange. I'm not sure about "nonsense" but I'd agree with misguided. And I'm assuming most of our readers can pass Sears' "basic VIX test." (Although I do not keep my mental VIX futures curve as up-to-date as I should.) I think of the VIX as just one piece of a complicated puzzle  you don't know the full picture from looking at only one part.
Andrew Thrasher Asks Whether Volatility Can Be Predicted
Mark Melin - ValueWalk
In algorithmic trading and risk management system development, a quest for the "holy grail" has been centered on creating a system that warns of forthcoming market volatility. While no system of risk management is perfect at warning about a significant stock market decline, Andrew Thrasher, a portfolio manager at Financial Enhancement Group, recently was the 2017 Charles Dow Award winner for a paper he wrote on "Forecasting a Volatility Tsunami." In the paper, Andrew Thrasher makes the assertion that it is the suppression of volatility returns dispersion that has, in the past, led to higher market volatility.
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When greed disguised as terrorism is used for stock market manipulation
Sidhartha Shukla - MoneyControl
Back in 1972, Norwegian climate expert Jørgen Randers in his book The Limits of Growth had said - "It is profitable to let the world go to hell." This may have been said in context with policy negligence towards curbing climate change but the statement holds true in many aspects of life, as there are many who thrive by turning chaos into profit.
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****SD: More on the nutty options scheme behind the bombing of a German soccer team's bus.
Aiding Millennials to Achieve Financial Security and Independence
Bob Lang - CBOE Options Hub
As the dad of two upstanding children of the millennials generation, I'm excited about their future as the embark on their journey to conquer the world. My kids turn 18 and 20 in May, and there is nobody more proud of their accomplishments than me. My daughter is about the graduate high school with a strong GPA, works part time, has interests in politics and diplomacy along with an enormous talent in the arts (theater, song and dance). She is off to college this fall.
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Nuclear war in Korea? Investors aren't worried
David Goldman - Asia Times
Armageddon may be in the offing on the Korean peninsula, but you would never know it by watching the cost of hedges on Korea's exchange rate and equity market.
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| | | | | | Exchanges and Clearing | | | Bats Targets Transparency with Dedicated Data Feeds for U.S. Listed ETFs
Press Release - Bats
Bats, a CBOE Holdings, Inc. company, and a leading market for exchange-traded fund (ETF) trading globally, today announced the planned introduction of the Bats ETF Implied Liquidity Feed, which provides investors with a critical reference view of ETFs versus their underlying securities.
The feed, which is the first of its kind and is filed and pending publication by the Securities and Exchange Commission, measures the implied liquidity of a fund using select data points, which includes information regarding the ETF's underlying securities. The feed includes a proprietary calculation of the fund's implied liquidity and the aggregate best bid and offer of all displayed orders across the four Bats equity exchanges.
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OCC Names former State Street and Department of Defense Information Security Officer as Chief Security Officer
Press Release - OCC
OCC, the world's largest equity derivatives clearing organization, today announced the appointment of Mark Morrison, formerly with State Street Corporation and several government defense and security agencies, as Senior Vice President and Chief Security Officer, a new position. Morrison will report to John Fennell, Executive Vice President and Chief Risk Officer.
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Intercontinental Exchange Completes Acquisition of TMX Group's Atrium
Press Release - Intercontinental Exchange
Intercontinental Exchange (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced it has completed its all-cash acquisition of TMX Atrium, a global extranet and wireless information services business, from TMX Group. The transaction was announced in February and the terms of the agreement were not disclosed. The financial impact of the transaction will be immaterial and was included in ICE's financial guidance for 2017.
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| | | | | | Regulation & Enforcement | | | Trump's Favorite for Wall Street Cop: A Ferris Bueller Prototype Who Angered Chicago Feds
Christian Berthelsen and Matt Robinson - Bloomberg
President Donald Trump's leading candidate to run the nation's most prestigious prosecutor's office infuriated government lawyers a decade ago by testifying as a defense witness for a former Illinois governor facing U.S. corruption charges.
jlne.ws/2pnUbk2
Mercer's White House connections hang over IRS' attempts to collect $7 billion from his hedge fund
Scott Christianson and Greg Gordon - Idaho Statesman
IRS leader Koskinen has said publicly that he intends to finish his term. On his watch, the agency hasn't been cowed by the Mercers. The IRS recently released a little-noticed advisory stating that its top targets in future business audits will include so-called "basket options," the instruments that Renaissance and some other hedge funds have used to convert short-term capital gains to long-term profits that have lower tax rates. But Renaissance, with assets estimated at $97 billion on Dec. 31, 2016, has shown no signs of buckling to the IRS's demands.
jlne.ws/2podiKQ
EU to ease derivatives rules, holds fire on euro clearing changes
Huw Jones - Reuters
The burden of new regulation for derivatives markets would be eased and competition increased under proposals from the European Union's executive, a document seen by Reuters showed, which omitted any moves to curb euro clearing in Britain after Brexit.
jlne.ws/2po7Kja
Eaton Vance trader to plead guilty to defrauding firm
Beth Healy Globe Staff - Boston Globe
A trader and portfolio manager at Boston-based Eaton Vance Management has agreed to plead guilty to defrauding the firm's mutual funds of nearly $2 million, federal prosecutors in Boston said Monday. Kevin J. Amell, 45, of Hingham, allegedly used funds he managed in an options scheme involving his personal brokerage accounts.
jlne.ws/2qpSNvE
****SD: I missed this last week. SEC press release here.
SEBI may allow hedge funds to enter commodity derivatives
Ankit Doshi - VCCircle
The Securities and Exchange Board of India (SEBI) has proposed allowing category-III alternative investment funds (AIFs), which include hedge funds, to participate in the commodity derivatives market albeit with riders.
The capital markets regulator floated a consulting paper on 28 April proposing the involvement of category-III AIFs in all commodity derivatives products traded on commodity derivatives exchanges.
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| | | | | | Strategy | | | Outcome: Net Fun
Meredith Kelley Zidek - CBOE Options Hub
Shorting UVXY is sort of like making pancakes and flipping them in the air and catching them with the pan. You can entertain yourself and others like that for a while, and you just may accumulate a large stack of perfectly browned piping-hot pancakes, but sooner or later some raw batter is going to hit the kitchen floor, and that is not much fun. And what if everyone eats up all your pancakes in the meantime, and you're stuck with nothing but a kitchen-floor disaster?
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The Truth About Volatility and Options Trading
Schaeffer's Investment Research
In the course of composing a recent Chart of the Week commentary, it occurred to me that I've actually never seen a better juxtaposition of historical volatility (HV) and price action than on the chart of the VanEck Vectors Semiconductor ETF (SMH) below. And in particular, how over strongly trending periods of persistent upside price action, HV can -- and generally does -- decline sharply.
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Looking at covered call options and tax treatment
Murray Becotte - The Chronicle Journal
FREQUENTLY investors look to their equity portfolio to help generate income for them by purchasing high yield equities or using other strategies. This is particularly true when coupon rates on fixed income instruments are low.
One investment strategy used in flat market conditions involves the selling of call options on equities that are present in the portfolio - a covered call strategy. This strategy is well suited to an environment when a stock trades on a relatively tight price-band, and the investor doesn't foresee large upside price-potential for the stock.
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