The rise in market volatility could give a boost to these stocks, says Piper Sandler

Published Wed, Feb 26 20209:59 AM ESTUpdated Wed, Feb 26 20204:00 PM EST

(This story is for CNBC Pro subscribers only.) The coronavirus wiped trillions of dollars from the U.S. stock market during the two-day sell off this week, but the crazy trading could actually end up benefiting certain stocks. Trading volumes at exchanges and trading companies are surging during the market turmoil, and Piper Sandler expects the CME Group , Cboe Global Markets and Virtu Financial to take advantage of the heightened activity during this market tailspin. The firm has an overweight rating on all three stocks. "If volatility remains at these heightened levels, we'd expect CME, CBOE and VIRT shares to continue to outperform the market," Piper Sandler analyst Richard Repetto said in a note to clients on Wednesday. Over the past three tumultuous trading days the S & P 500 is down more than 6%, as investors worry the deadly coronavirus will dent global economic growth. Over the same period, shares of CME Group are essentially flat, Cboe Global Markets has only fallen about 0.4% and Virtu Financial has rallied 1%. Financial exchange company CME Group posted record trading volumes on Tuesday, reporting 54.2 million contracts during the past two trading days. This is well above the prior February-to-date average of 20.9 million contracts, Repetto said. Cboe Global Markets, the creator of the commonly used fear gauge or Volatility Index, said it has seen elevated volumes in its VIX futures products, Repetto added. The Cboe traded nearly 770,000 VIX futures contracts on Tuesday, the strongest trading day since October of 2018. The VIX has jumped more than 10 points in the past five trading days. Plus, financial cervices company Virtu Financial has historically reported outsized earnings in periods of high volume and volatility, Repetto said. Piper Sandler has a $240 per price target on CME, a $135 per share price target on Cboe and a $20 price target on Virtu Financial. Shares of the CME Group popped 5.7% on Wednesday, Cbeo Global Market rose 1.7% and Virtu Financial shares were up 2.7%.

Traders work in the S&P 500 options pit at Cboe Global Markets Inc. in Chicago, Illinois.

Daniel Acker | Bloomberg | Getty Images

(This story is for CNBC Pro subscribers only.)

The coronavirus wiped trillions of dollars from the U.S. stock market during the two-day sell off this week, but the crazy trading could actually end up benefiting certain stocks.