Don't Buy Calls on CME, Despite New Bitcoin-Fueled Highs

Front-month options on CME are unusually expensive right now

Managing Editor
Dec 1, 2017 at 9:47 AM
facebook X logo linkedin


One stock on the move today is CME Group Inc (NASDAQ:CME), after the exchange operator said it will launch bitcoin futures beginning on Monday, Dec. 18. This much-anticipated development paves the way for bitcoin ETFs and other cryptocurrency derivatives.

CME stock is up 1.2% at $151.27 in morning trading, and earlier set an all-time high of $152.14. CME is now up more than 31% on the year, and has gained about 90% from its January 2016 intraday low of $79.67. In fact, the equity's 14-day Relative Strength Index (RSI) is hovering right around 80 -- firmly in overbought territory.

Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows an influx of CME calls during the past two weeks. CME Group stock's 10-day call/put volume ratio of 5.91 ranks in the 91st annual percentile, suggesting calls have been bought to open over puts at a faster-than-usual clip.

However, it's not the best time to buy short-term options premium on CME, despite today's BTC futures buzz. CME's Schaeffer's Volatility Index (SVI) of 29% arrives in the 100th annual percentile, which means extremely elevated volatility expectations are being priced into front-month options -- effectively raising both the cost of entry and breakeven point on a purchased call or put play.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI