Analysis: CBOE

After you receive this alert, we will buy 335 shares of Cboe Global Markets (CBOE) at or near $116.00. Following the trade, the portfolio will own 335 CBOE shares, roughly 1.0% of the portfolio.

This morning we are calling up the shares of Cboe Markets to the portfolio with a Two rating and a $137 price target, essentially the one we laid out to members when we added CBOE shares to the Bullpen several weeks ago. We are pulling the trigger on this latest addition following another month of robust options trading volume, the key driver of Cboe's revenue and profits, in March as well as technical support at the $112-$113 level.

As we learned in the company's monthly statistics for March, continued options trading strength led total volume across Cboe's four options exchanges to reach 830.3 million options contracts, a record for the second consecutive quarter. Quarterly average daily volume (ADV) reached a new all-time high of 13.4 million contracts traded per day. That technical support allows us to wade into the shares even though our fundamental analysis suggests the shares could trend lower, hence our Two rating out of the gate. Should the shares pullback, we would look to add to the position size.

As we discussed on today's Daily Rundown, in addition to the continued growth in options volume trading, we also like CBOE shares as they not only help diversify the portfolio but they also bring another dividend payer into the fold. WE will continue to monitor the company's monthly statistics for both confirmation for ongoing strength in options trading but also for signs that strength is waning. If options trading volume continues to surge, and the shares retreat under market pressure to below the $110 level, we would look to revisit our Two rating.

(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)