The CBOE is at an all time high. ?As I stated multiple times in the last few months, ?for those who might be afraid of things like VIX or even ‘options’ stock on CBOE itself can be a hedge on the market. ?Why? ?Because when the market is tanking CBOE is breaking records in VIX and sometimes SPX. ?In addition to a the stock likely rallying in a down market, it has a dividend and listed options. ?So even when it sits there is a chance to collect some income. ?
The stock is at an all time high and I think it could make some sense to buy call options on the exchange. ?Take a look at the chart below:
LivevolX (r) www.livevol.com
When a stock hits a 52 week high it almost always keeps going. ?On the other hand when IV’s hit 52 and 104 week lows, ?they typicaly bounce. ?This creates a situation where the IV of the option is likely to rally and the underlying is going to rally. ?When that happens: ?I like to buy calls.
The Trade:
The Jan 62.5 calls seem cheap to me, and might be a decent portfolio hedge against another serious drop. ?