Investment-blog.net: Stocks, Emerging markets, Bonds, Currencies and Commodities

By Jeff Kearns
Nov. 20 (Bloomberg) — U.S. options trading slowed this month from a record pace after hedge funds collapsed and the biggest market swings since 1929 made equity derivatives too expensive to be used as insurance against stock losses.
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An estimated 700 hedge funds may go out of business by the end of the year, an increase of 24 percent from 2007, according to Hedge Fund Research. The Chicago-based firm’s Fund Weighted Composite Index fell 6 percent in September and another 6 percent in October.

“Over the last 10 years, the amount of volume that was because of hedge funds really went up as they were getting bigger and bigger and trading more and more,” said George Ruhana, chief executive officer of Chicago-based OptionsHouse LLC, the online brokerage unit of PEAK6 Investments LP. “Now their capital base isn’t going to allow them to trade as much.”

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