Derivs - Equity

Bank of Ireland has set up a structured products desk in Stamford, Conn., to offer customized investments to its corporate clients.

Flat to tightening credit default swaps in the homebuilders sector has some investors thinking the area may be worth a fresh look as spreads in other industries widen.

The dramatic spike in U.S. equity volatility, which this week hit 48% for only the fourth time since the Asian financial crisis of 1997, has some hedge funds zeroing in on the nascent vol trading space, a shift away from more traditional pure equity plays.

More than 60% of asset managers, pension funds and large-cap companies recently surveyed by an independent consultant are in support of lifting the U.S. ban on stock short selling, newly extended to Oct. 17.

Users looking to hedge exposure stock market swings are being advised to buy certain fx options to buffer against volatility. One strategy touted by Merrill Lynch is to buy puts on the Canadian dollar and calls on the Swiss Franc.

U.S. equity volatility measure the VIX hit 48.4% on Monday as initial hopes for the passage of the USD700 billion bailout plan were dashed.

Corporate investors wary of credit derivatives but keen to retain exposure to the equity markets via options are pushing banks to structure equity-linked notes that keep the face value of the notes on balance sheet but the mark-to market returns on the options off balance sheet.

Investors looking to ride our the turbulent market should pick up Euro STOXX 50 at-the-money calls through June next year, and finance them by selling an equivalent Standard & Poor’s 500 call to take advantage of anticipated outperformance by European equities.

RBC Capital Markets is seeing interest in three-month reverse convertible notes that contain puts referencing single-name blue-chips and using wider barriers than normal, because of heightened volatility in the market.

Jim Josephson, former head of equity derivative flow sales at Bear Stearns in London, is about to land at hedge fund Algebris Investments.

A new style of over-the-counter derivative that caps downside and upside potential the way an equity collar would, but more cheaply, is set to be unveiled today.

Investors are concerned moves to regulate credit default swaps could drag in equity options, since buying a put or call on a stock or index could be considered similar to downside protection offered by CDS.