Derivs - Equity

Institutional investors are scoping single stock options in Europe on the back of positive economic data and a spurt in merger and acquisition activity. The interest rebound comes after what equity derivatives traders describe as a lull in recent months.

Liquidity in MSCI options is set to increase as new entrants use the instruments on the back of the launch of listed contracts in the underlyings.

Hedge funds are deploying both short and long derivative strategies on the Japanese equity market as investment flows return to the market following the end of summer.

Ralph Maison, the ex-head of equity index options trading at the Royal Bank of Scotland in London, is set to join Nomura in a similar role.

Investors should buy a December 2013 10,400/11,200/12,000 call fly on the HSCEI as a cheap strategy to play upside on the Chinese index following better-than-expected economic data published on Monday and over the weekend.

Turnover in listed structured products on European exchanges increased in the second quarter of 2013 on the back of increased market volatility, according to the European Structured Investment Products Association.

Adam Crawford, a former equity derivative trading strategist at Citigroup, has joined ANZ as the firm’s head of structuring in Hong Kong.

South Korean corporations not already licensed by the Financial Services Commission are now allowed to issue certain types of non-principal protected structured products, following the implementation of a recent amendment to the country’s main financial regulation.

Some players are positioning for a decline in volatility using Eurostoxx 50 and Vstoxx option strategies in the wake of the volatility spike on Monday and Tuesday.

Investors should look at using a short October 2013, March 2014 call calendar ratio strategy referencing the Nikkei 225 to take advantage of a potential inversion of the index’s volatility term structure, after it flattened earlier this week following flows in the short-end volatility.

Financial innovation is arming investors with a growing array of vehicles to protect portfolio risk. In the U.S., portfolio managers are increasingly utilizing futures and options on the Chicago Board Options Exchange VIX index as part of hedging programs.

Algorithmic and high-frequency trading does not affect the volatility of futures prices, according to a report by the Futures Industry Association.