CBOE Stock Put Options Hit Peak Popularity Ahead of Bitcoin Futures Launch

CBOE shares hit a record high on Monday

Dec 8, 2017 at 11:26 AM
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Ahead of the company's launch of bitcoin futures on Sunday, Cboe Global Markets Inc (NASDAQ:CBOE) continues to trade near Monday's record high of $127.78, last seen 0.5% higher at $124.82. But even as the cryptocurrency storms to record high after record high, a number of high-profile Wall Street firms are actively opposing bitcoin, such as banks JPMorgan Chase (JPM) and Citigroup (C). Meanwhile, there's a lot of interesting options data surrounding CBOE stock that's worth digging into amid the bitcoin madness.

First of all, two of our most cited options indicators are pointing to accelerated put activity on the equity. Specifically, the security's 50-day put/call volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 81st annual percentile, showing puts have been bought to open relative to calls at a faster-than-usual clip.

Plus, CBOE has a Schaeffer's put/call open interest ratio (SOIR) of 1.13, which shows put open interest among options that expire within three months outweighs call open interest. Not to mention, this reading is just 2 percentage points from a 12-month high, showing such a put-skew is very rare. It should be noted, too, that put open interest is now at a 52-week high of 24,738 contracts.

Digging deeper, the January 2018 120-strike put saw the largest increase in open interest over the past two weeks, and is now home to peak open interest for Cboe Global Markets. Data from the major options exchanges shows mostly buy-to-open activity here, suggesting some are speculating the stock will fall below $120 in the weeks ahead.

On the one hand, it's become much more expensive to buy short-term CBOE options, based on the stock's Schaeffer's Volatility Index (SVI) of 24%, which ranks in the 74th annual percentile -- meaning volatility expectations are heightened at the moment. But the stock has a Schaeffer's Volatility Scorecard (SVS) of 99, showing a strong tendency for CBOE to make bigger moves than what the options market was pricing in over the past year.

Turning to the charts, the shares have been in an extremely steady uptrend since the beginning of 2017, and now sport a year-to-date gain of roughly 69%. More upside could be coming, too, if short sellers keep covering their positions. In the last two reporting periods alone, short interest fell by 33.5% -- but CBOE still has a healthy short-interest ratio of 5.20, showing there's room for this trend to continue.

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