Update - August 30, 2022

An Ideal Play for a Volatile Market

There’s some interesting news coming out of one of our most iconic holdings this week.

CME Group (CME) is the king of futures and options contracts. Its services help the financial world go ’round.

We first got into the play in 2020 as a hedge against inflation. The move has paid off. The company has done well as investors have searched for volatility hedges and instruments to protect against the market’s downside swings.

But yesterday, CME Group announced something that has me convinced it is getting set up for the next generation of finance.

It is adding several new crypto products to its portfolio.

The first two are natural offshoots of its current products. CME is adding euro-denominated Bitcoin and Ethereum futures to its offerings. The idea behind what will surely be popular products is that they simply offer more currency pairs for traders to focus on.

Instead of having to compare the two leading cryptos to the dollar, large investors will now have an easy way to profit from moves between the euro and crypto. With a volatile European currency these days, it’s an interesting idea.

But much more intriguing – at least for speculative types – is CME’s new Ethereum options contracts.

These are likely to be quite popular… especially over the next few weeks.

If you’re in the crypto space, you probably know that the Ethereum blockchain is scheduled to go through a major update in September. It’s driving a lot of speculation into the market.

CME’s timing is clearly designed to take advantage of it.

The company’s new project will hit the street on September 12… just days ahead of the Ethereum update, which is tentatively scheduled to happen sometime between September 15 and September 20.

These options should see very strong demand in their first few days on the market.

Now… will a couple of new contract offerings make or break CME’s quarter? No. They’ll hardly be a blip on the $70 billion company’s income statement. But they show that CME is not some old, stodgy firm. It’s constantly developing new products to keep up with what its market wants.

That’s why this company is a strong long-term position.

If you’re a new subscriber or haven’t bought shares yet, I recommend you grab some today. The more volatile the market is, the more important it is to own a stock like this one.

It offers strong growth and a fair dividend… and it is clearly thinking about the next chapter of finance.

It’s a worthy buy in a skittish market.