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This Selling Will Not Stand, Man: NYSE To Bust 17 Minutes Of Option Trades (When Market Dropped)

Tyler Durden's picture




 

As the cash equity markets opened in the US this morning, it appears a slew of options-based bearish bets were placed across a variety of stocks (starting with letters H to L). This slammed the Dow down into the red and to the all-important 15,000 Maginot Line. All was 'normal' until that critical indicator of 'wealth' finally broke 15,000 and almost instantly the exchanges went into "catastrophic error" mode which has resulted in trades from 0930ET to 0947ET on the CBOE being "busted". The exact time when the selling was under-way (so we can't have those sells being counted?). However, there is a rumor that what really drove it was Goldman losing millions on options trades (including JPM), and instead of the NYSE forcing the firm to eat its losses as it did with Knight, it decided to unwind 17 minutes of trades. These are the 'markets' in which investors are supposed to trade?

 

 

Rumors are that the Goldman options desk was hurt by mispricing in JPM options trading... and a glance at JPM's open anecdotally confirms something was indeed amiss...

 

From NYSE Amex:

Trades appear to have taken place in symbols beginning with H, I, J, K, L between 9:30am-9:47am

This is nothing new... from yesterday:  

NYSE Euronext briefly halted trading yesterday in about 40 exchange-traded funds and notes when the securities were added to a program aimed at curbing sudden price swings. Most of the ETNs and ETFs trade so seldom that there probably wouldn’t have been any transactions even if they hadn’t been halted, data compiled by Bloomberg show.

 

They were set off during implementation of the protocol known as limit up/limit down that pauses securities when bid-ask spreads become too wide, NYSE Euronext said.

Charts: Bloomberg

 

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