amsterdamtrader

The weekly and daily options on the AEX index are extremely popular, and Euronext decided to have a go at weekly options in the equity single stocks. Onwards from July 16th we will be trading weekly’s on Mittal, ING and Royal Dutch Shell (RD). The basic idea is pretty similar compared with the AEX weekly options. However, there are a few small differences.

Just like in the index, the weekly options in the single stocks won’t be just a new maturity in the regular options. It will be a separate class, called 1RD, 2RD, 4RD and if applicaple 5RD – with the number for the first friday, the second friday etc. For obvious reasons there won’t be a new class for options expiring the regular third Friday. Except some extra useless series in expiration week, though.

The reason for introducing these weekly’s as a separate class isn’t to bully investors (who can’t roll over their positions with simple time spreads). Systems at several institutions monitor options with a four digit maturity code (“1212″ for Dec ’12) and hence lack the flexibility to include the weekly maturity schedule. Sounds like the Y2K problem.

The weekly options for 4MT, 4IN and 4RD will commence 16th of July with 11 strikes each. The strike interval will be in small steps. Take ING for instance, it will have five strikes around the at-the-money with a 10 cent interval, and three more strikes on the upside and the downside with steps of 20 cent. A larger strike interval for higher stock levels of course.

We will witness tight spreads, low absolute values and regular early exercise options. Nice as well are the dividend games to be expected a few times a year. All current liquidity providers can join as primary market maker in the new classes. There won’t be any competitive market makers selected.

Hard to say whether or not this single stock options will become a success. For retail investors the transaction costs are killing them with these low priced options. They need a real home run to make some profit. Euronext should have cut the transaction fees for investors to bring this 4MT, 4IN and 4RD markets alive.

The G20 summit in ever peaceful Toronto has just finished. The undefined group of nations decided not to agree on everything special, so far so good. There definitely was a serious risk at stake for the trading community. Angela Merkel and a few other presidents of countries knocked out of the world cup pitched the idea of a financial transaction tax.

Perhaps my experience as a trader shaped my mind in a way which makes it difficult to understand what these people are thinking. It sounds too bizarre to take it seriously. Any friend or family member proposing me a brand new idea on taxing all financial transactions, and spend the benefits on uh.. the fight against global warming and poverty, I would seriously advice to cool it with the beer during the barbecue. Time to turn the burgers, and slow down with with the beer.

This Merkel and Sarkozy are seriously in their pitch for Financial Transaction Tax (FTT). This is a kind of mass stupidity which is hard to believe. Several organizations support this FTT, like the Halifax Initiative and clowns for financial reform. The core idea is taxing all transactions against a rate 0,05%. Just spend a minute contemplaining the consequences of such an idea. A future on the AEX would be taxed with 65 euro on a round trip.

A coalition of the big four Dutch trading firms (Optiver, IMC, All Options, Flow Traders) gave an interview in the FD this friday. Somehow the united market maker association, the Association of Propietary Traders (APT), wasn’t involved in the matter but let’s hope they are doing some lobby work. This time the threat to the market as a whole didn’t receive much support. But in the future any regulation aimed at the OTC mess elsewhere could wipe out most small market makers who won’t have the pockets to survive a few years of strange regulation. In general other relevant companies (exchanges) didn’t reach mass attention in the press. Worrisome to see this trading meltdown proposal coined without broad media coverage.

Hedgefund manager John Hoek shares the same opinion in de Telegraaf : link (Dutch)

After Van der Moolen’s the garage sale last winter, most of us expected this firm to vanish from the daily news. Could be an interesting textbook case of a company inadequate to adapt itself to the a new climate, with some curious human interest side stories. While the court investigations are ongoing into the board’s mismanagement, some small news has already been released.

First of all, the ousted CEO Richard den Drijver suddenly appeared back on stage – and he surprised the world by talking. He gave a short interview. His message wasn’t anything new, the company was in perfect shape when he was forced to leave and he blames the advisory board for the collapse of the firm. Especially Peter Zwart, his successor, was guilty for ruining VDM with requesting the financial watchdogs to raid the firm. My bet is this Den Drijver actually believes his own theory. Then a strange thing happened which is in big contrast with virtually everything written on this website and all official newspapers. The official lawyer and accountant cleaning up the mess confirm Den Drijver has got a point. “Zwart told me himself he invited the financial watchdogs to raid the house”. Peter Zwart denies “that’s bullshit, never requested for any raid at all. We didn’t ruin the company in three months, that has been done in the years before”. I assume the liquidating accountant and lawyer (Gelderloos and Schaink) have been misquoted, and put my money on Peter Zwart. Speaking As someone mentioned in the comments elsewhere on this website, in the Worldcup betting poule of former VDM employees RDD is leading the pack. Visiting the foreign football in Spain paid by the company certainly pays off! (and no, don’t seriously believe it is the real RDD playing. Nice subleague name though.)

With everyone disagreeing with everyone, let’s move on to someone else who absolutely does not agree at all. Enter Markwin Maring with the company Avalon Media Group, or AMG for friends. Avalon borrowed 6 million euro from VDM in 2008, partly to payback a loan from Avalon to Hans Kroon. It’s a perfect mess with Hans Kroon acting in the advisory board of Avalon (well, according to their website before the press discovered it) and his son Gaby Kroon tied to the same firm. The administrators of VDM reclaim their money with interest, amounting 7,2 million. Because of some alleged hustle with legal entities, other private companies from Markwin have been seized and a private home has seized as well. These liquidators really bite. (source : fd.nl)

Avalon even hired a well-known Dutch spindoctor, Charles Huijskens, to handle the press. A good read is their highly unbelievable explanation of their view of the story with VDM. They developed a trading platform in stocks and options for the iPhone, a television channel and internet. Especially the iPhone platform must have been way ahead of its time, as it was finished a year before the iPhone itself was released by Apple. Anyway, the AMG / Avalon family claim 10 million from VDM. Feed for the shredder.

Rene Schelvis just bought a brand new car, quotenet reports. Together with Rob Defares he has founded IMC back in the old days of the open outcry trading. Schelvis was known for being the cautious one, whereas Defares had more appetite for risk. Schelvis sold his 30% stake in IMC to Wiet Pot in October 2007. With an estimated net worth of 50 million euro he entered the Quote 500 rich list on place 471 in 2009.

His new Lamborghini Murciélago LP670-4 SuperVeloce is a true supercar with a corresponding price ticket. Schelvis paid €510.736, of which €158.674 of the high Dutch tax. Escaping this car tax is possible by using a foreign license plate – but that would give too much hassle. Fans are excited to see this SuperVeloce cruising through the streets of Amsterdam. A few have even been taken for a tour by Schelvis.

After exactly one month of trading, the dividendfutures on the AEX haven’t yet convinced the market. The futures opened for trading on May 3rd, and Susquehanna or SocGen is quoting these futures.

Didn’t really expect turbulent trading, as the Amsterdam financial market is notorious for its unwillingness to trade new instruments other than options. The dividend futures are heading for the financial graveyard stuffed with potato-futures and currency related instruments. There hasn’t been traded any single dividend future contract yet. None. Zero.

Every disadvantage has it’s own advantage, according to Johan Cruyff. This famous quote applies to the financial market as well. Closing down this dividendfuture market can be arranged without any hassle – there is no open interest to deal with. Just switch of the light. However, Euronext would never shut down any product – as there’s hardly any cost involved in keeping a small market open.