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Spoofing, Surveillance and Supervision

Jay Biondo, Product Manager - Surveillance at Trading Technologies, co-authored an article along with James Lundy and Nicholas Wendland, both of Drinker Biddle & Reath LLP, reviewing the CFTC's regulations and expanding efforts, 21st century surveillance and supervision, as well as strategic recommendations.

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January 3, 2006

A Short-Term Options Battle: The make or break point for equity traders

By Mark Longo

At the end of the day, these new short-term products may hold more theoretical interest than practical value. Although they have piqued the curiosity of academics around the world, the true market for these products remains unknown. Are there enough traders interested in short-term events to merit the creation of a new class of options? If so, can these products succeed in luring new customers to the options markets or will they simply cannibalize existing index volume? The early tally is unclear. The CBOE's Weeklys launched on October 28th with little fanfare and even less volume. As of this writing, the CBOT/SFE products are still awaiting regulatory approval in Australia.

Prometheus Unbound?

However, if either of these products takes off, then we may finally have found the Prometheus of the options world. The options industry has spent three decades trying to sell its products to the retail investor.

Unfortunately, its efforts have met with little success. By taking options out of the hands of wealthy institutions and putting them into the hands of the average investor, these short-term products may finally succeed where so many others have failed. Let's just hope they meet with a better fate than their Greek predecessor.

Comments or questions about the column can be sent to Mark.Longo@sourcemedia.com