Trade of the Day — Sizing up the CBOE
We’re going to look at CBOE for today’s Trade of the Day. The Chicago Board Options Exchange dates back to 1973. Prior to its launch, options were quoted in newspapers. It was an inefficient market. CBOE brought options trading to an exchange floor. Today, CBOE Group owns the CBOE and the C2 options exchange. The Chicago Board Options Exchange remains one of the largest among nine exchanges. CBOE is really one of the only pure plays on the options market. OptionsXpress was another, but it’s now being bought out by Schwab. CBOE is also a realistic takeover candidate because the industry is consolidating. NYSE bought AMEX, Nasdaq bought PHLX, NYSE bought Arca, etc.
CBOE saw a flurry of bullish activity late in the day today. It was speculative buying in April 30, May 30 and Sep 31 calls. I will note the action again tomorrow morning. Shares added 61 cents to $28.75 and, for the Trade of the Day, I’m going to look at the Sep 31 buy-write at $27 (selling the Sep 31 calls at $1.75). I think it’s a good stock to own for the long haul and the buy-write gives upside to $31, or 14.8 percent, through mid-September. A more aggressive play would be a Jun 29 – 32 call spread at $1 even. Today’s Trade of the Day, however, is the CBOE Sep 31 buy-write at $27 or better.
Category: TradeOday
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About the Author (Author Profile)
Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.
