Bitcoin Bulls Take Profits on CME Group

CME Group stock has been flirting with record highs since announcing plans to list bitcoin futures

Dec 11, 2017 at 2:46 PM
facebook twitter linkedin


Bitcoin futures have made quite a splash, with surging demand for the cryptocurrency halting trading and temporarily shuttering CBOE's website earlier. In fact, two fund firms have reportedly already asked regulators for permission to launch an ETF on the digital currency. While Cboe Global Markets Inc (NASDAQ:CBOE) and other Bitcoin-related stocks are in focus today, one equity will likely capture Wall Street's attention next week: exchange operator CME Group Inc (NASDAQ:CME), which will launch bitcoin futures on Sunday, Dec. 17. Below, we take a look at CME stock, and how options traders are taking profits ahead of the launch.

On Friday, Dec. 1, CME Group made the bitcoin announcement. As such, CME shares have rallied 2.4% in just over a week, and notched a record high of $155.29 on Dec. 5. The security has now climbed more than 32% in 2017, and was last seen 0.2% higher at $153.08.

Nevertheless, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.48 is higher than 94% of all other readings from the past year. This indicates that short-term options traders have rarely been more put-biased toward CME. However, this is likely due to a liquidation of in-the-money December and January 2018 calls -- on top of an influx of December 150 puts -- in the past week, suggesting near-term call traders were cashing in their chips as CME explored new highs.

CME Group OI changes

Although CME Group stock is overbought, per its elevated 14-day Relative Strength Index, there are signs of sideline cash to drive the shares even higher. While short interest represents less than 2% of the equity's float, it would take about a week to buy back the 4.8 million CME shares sold short -- plenty of fuel for a short squeeze.


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 
Special Offers from Schaeffer's Trading Partners