REUTERS/John Gress
Traders relay trades on the floor of the Chicago Board of Trade July 9, 2007. Shareholders on Monday wrap up voting on a merger deal that would combine the parents of the Chicago Mercantile Exchange and Chicago Board of Trade to create the world's largest derivatives exchange.
That is according to a note from UBS' Alex Kramm, which said that surging volatility spurred increased activity on America's largest options exchange last month.
"We view CBOE as the best growth story in the exchange industry," he wrote.
The CBOE is home to the VIX index, which uses option prices to gauge expectations of volatility. The VIX is often described as the 'fear index'.
Kramm said that a surge in trading activity at the end of the second quarter and beginning of the third "shined a spotlight on CBOE's leverage to volatility."
"We believe there is upside as a wider set of market participants appreciates the opportunity to hedge against or speculate on volatility," he wrote.
CBOE's top and bottom line numbers topped expectations last quarter thanks to better trading volumes.
Take a look at CBOE's volatility index:
UBS