|Back to main|
The Easiest Way To Profit From The 'Options Boom'
8/28/2013 3:30:00 PM
One of the few certainties in themarket is that investorswill always search for new ways toprofit . And there is one strategy that continues togain popularity.
That's because it enables investors to makemoney regardless ifstocks go up or down. It also provides the potential for investors to score biggains with very little risk.
I'm talking about options. In response to market volatility and uncertainty in the past four years, options strategies continue to gain popularity with both institutional and individual investors.
While that has been beneficial to leading financial exchanges such as CME Group ( CME ) and Intercontinental Exchange ( ICE ) that carry options contracts, there is another financial exchange that offers unmatched exposure to growth in options trading volume .
The Chicago Board of Options Exchange (Nasdaq: CBOE ) is the undisputed leader in the domestic options market, boasting 28%market share whileoffering options onequities ,equity indexes and exchange-tradedfunds (ETFs ). Founded in the early 1970s, the company went public just three years ago, cashing in on the trend of financial exchangesgoing public .
Much like the stocks of other financial exchanges, CBOE has been surging in 2013, withshares up 61% on theyear . Take a look at the big gain below.
But the CBOE is different than the other publicly traded financial exchanges. As an options specialist, the CBOE is the purest play on the options market. That places the exchange in a unique position tocash in on the growing popularity of options and increased market volatility.
And that's exactly what is happening. The CBOE continues to see impressive results from two of its most important proprietary contracts.
The first is itsVIX (volatilityindex ) contract, with bothfutures and options trading volume exploding in the past year.
July trading data showed thatVIX futures volume was up 53% from last year, while VIX options volume was up 36%. That has VIX futures volume up 99% on the year from 2012, already breaking 2012's volume record in the first eight months of the year. The growing popularity of the CBOE's VIX complex is a powerful engine of growth as traders continues to search for more opportunities to speculate on volatility and investorshedge unwanted portfolio risk.
Looking tocapitalize on the big popularity spike in VIX
futures and options, the CBOE is on schedule to extend VIX
futures trading by 45 minutes from its current closing time in
September. Phase 2 of the initiative will enable its European
clients to trade during regular domestic hours.