(Bloomberg) -- Markets in turmoil are once again good for Cboe Global Markets Inc.
The stock is the third-best-performing component of the S&P 500 Index this month, up more than 5 percent as investors bet that increased trading will boost revenue and profit at the bourse. Shares are beating the equity benchmark by more than 11 percentage points, their largest monthly outperformance in more than five years.
The exchange operator’s proprietary products include options and futures tied to the Cboe Volatility Index, a measure of the 30-day implied volatility for the S&P 500 Index that’s often called Wall Street’s "fear gauge."
More volatility in markets means more volumes in the options and futures traded on its exchanges. Over 2 million options tied to the VIX changed hands on Thursday for the first time since Feb. 12.
Shares of Cboe had the exact opposite reaction in February, a month that included a record one-day explosion in the VIX. They trailed the S&P 500 by the most since 2010. That’s because the tumult was a double-edged sword. Sure, activity spiked, but the carnage wiped out several exchange traded-products that let investors bet on enduring market calm and amounted to a noteworthy share of VIX futures activity.
The bloodbath was seen as the end of an era for this vehicle of the short-volatility trade; indeed, assets in related funds have yet to recover. Thereafter, a return to a period of relatively low realized volatility and moribund activity in VIX options saw shares of Cboe lag the S&P 500 Index by more than 30 percentage points this year heading into October.
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