Why The Spike In VIX Could Be Good For CBOE Volumes

• Over the past month, the VOLATILITY S&P 500 (INDEXCBOE: VIX) gained more than 150 percent.
• Alongside that increase in price comes an increase in volumes traded – a fact that should help shares of CBOE Holdings, Inc. (NASDAQ: CBOE), UBS said as the analysts raised its price target by 6 percent.
• UBS highlighted CBOE's gross revenue per contract for three months ending July, calling them "generally impressive," while also pointing out that options volume in August gained 62 percent year-over-year.

UBS raised its Q3 EPS estimates for CBOE Holdings, citing recent improvements in options volumes as well as improved gross revenue per contract (RPC). Alex Kramm said the firm now expects EPS of $0.69 versus estimates of $0.54 previous. Kramm noted that this would be "a new record quarter," led by gains in the exchange's proprietary products.

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Kramm said that in August, the CBOE set a new record for index options' average daily volume, which gained 62 percent year-over-year and 41 percent month-over-month. That also helped VIX options volumes, which spiked 78 percent year-over-year and 54 percent month-over-month.

Kramm didn't change the firm's valuation – still pricing CBOE at 25x 2016 EPS. However, since those estimates gained on better volumes and revenues, UBS hiked the price target from $62 to $66, a 6 percent increase. With CBOE closing at $62.58 on Tuesday, however, the analyst maintained the firm's Neutral rating on the stock.

Year-to-date, shares of CBOE Holdings have moved sideways, trading between $55 and $67 per share.