Fortress in the Storm: Why CBOE and MKTX Are the Ultimate Defensive Plays in Volatile Markets

In an era of escalating trade tensions and fiscal uncertainty, investors are scrambling to identify assets that thrive in chaos. Enter Cboe Global Markets (CBOE) and MarketAxess (MKTX)—two financial infrastructure giants that have emerged as bulletproof holdings in turbulent markets. Their unique exposure to volatility, liquidity demands, and institutional-grade dividends positions them as cornerstones for portfolios navigating today's geopolitical and economic crossroads.

Why Volatility Is Their Friend

Both companies operate in markets where fear and uncertainty drive demand. CBOE, the pioneer of the VIX “fear gauge”, benefits directly from heightened volatility. When investors seek hedging tools like options and futures, CBOE's derivatives exchanges and data platforms act as a financial airbag. Consider this:
- CBOE's SPX options averaged 3.11 million contracts daily in 2025, up 18% year-over-year, as institutions bulked up on downside protection.
- Its Cboe Clear Europe division processed 117.5 million client trades in late 2024, winning “Clearing House of the Year” for its role in stabilizing European markets amid trade disputes.

Meanwhile, MKTX dominates the $50 trillion global fixed-income market, where institutional investors flock during equity selloffs. Its electronic trading platform handles $1.2 trillion in daily bond volumes, acting as a lifeline for liquidity-starved portfolios. Even during Q1 2025's tax-related earnings miss, MKTX's record ADV (Average Daily Volume) in emerging markets and eurobonds underscored its unshakable institutional demand.

Dividends as a Safety Net

While fiscal uncertainty rattles cyclical stocks, CBOE and MKTX reward investors with defensive payouts. Both companies boast rock-solid balance sheets ($24B and $8.1B market caps, respectively) and dividend policies that defy market swings:
- CBOE's dividend yield currently sits at 1.8%, with a 5-year growth rate of 12% annually. Its payout ratio of 35% leaves ample room for hikes.
- MKTX just announced a $0.76 quarterly dividend, yielding 1.4%—a modest but reliable cushion. More importantly, its $173 million remaining buyback authority signals confidence in its valuation.

Structural Tailwinds: Trading Volumes and Rate Sensitivity

The real catalyst? Elevated trading volumes driven by macro instability. CBOE's VIX Index hit 39.01 in April 2025, its highest in two years, as investors priced in Fed policy whiplash and China-U.S. trade wars. This volatility supercharges CBOE's fee-based revenue streams—from options trading to data subscriptions.

MKTX, meanwhile, benefits from fixed-income's inverse relationship to equity volatility. As investors rotate into bonds during market stress, MKTX's platform acts as a tollbooth on this flow. Even in Q1 2025's tax headwinds, its record ADV growth in portfolio trading proved that demand for its services is inelastic.

Valuation: A Discounted Play on Market Chaos

Despite their resilience, both stocks are underappreciated by the market. CBOE trades at a P/E of 24x, a discount to its 5-year average of 30x, while MKTX's P/S of 10x lags behind peers like Tradeweb (TW) at 12x.

Risks? Yes—but Overblown

Critics cite MKTX's 20% overvaluation tag (as of May 2025) and CBOE's exposure to regulatory shifts. Yet both companies have proven nimble: CBOE's global expansion (Japan, Australia) and MKTX's AI-driven liquidity tools mitigate regional risks.

The Bottom Line: Buy Now, Hedge Later

With trade tensions likely to persist and fiscal policies in flux, CBOE and MKTX offer two-way upside:
- CBOE: A volatility amplifier with 124% YTD growth (as of June 2025) and a $231.10 peak—ideal for portfolios needing hedging exposure.
- MKTX: A fixed-income stalwart with dividend stability and a $296.68 52-week high—perfect for capital preservation.

Action Items for Investors:
1. Allocate 5-7% of equity exposure to CBOE and MKTX as volatility anchors.
2. Dollar-cost average into dips below $220 (CBOE) and $280 (MKTX).
3. Pair with inverse ETFs like XIV or SVXY to supercharge returns during VIX spikes.

In a world where uncertainty is the only certainty, these two stocks are the ultimate financial fortresses. Don't wait for the next trade war—act now.

Final Note: The market's next storm is brewing. CBOE and MKTX are the umbrellas you'll wish you owned.