The exchange got the nod to list and start trading options on the so-called “Alpha Indexes,” a Securities and Exchange Commission filing late Tuesday shows. The indexes, co-created by the designer of the first VIX “fear gauge,” track popular stocks’ performance versus a broader market benchmark. By listing options, Nasdaq hopes to let investors generate returns even when markets are down, with options that profit when Apple or Citigroup outperforms even a plunging stock market.

“In stock options, you’re actually making two bets. You’re betting that Apple will rise relative to the market, and also that the market will go up,” VIX designer Robert Whaley, now a professor at Vanderbilt University’s Owen Graduate School of Management, told Dow Jones Newswires at the indexes’ October unveiling. “With these, you’re getting a more precise investment in something you have some knowledge about.”

The Alpha Indices let you make a bet on one product vs. another, but with just one trade. In other words, lets say you want to capture the return of Apple over SPY…..well, you’re in luck, there’s AVSPY. And given the bull market in AAPL, you’ve done quite well with that one. Not quite so much with the other 3 that go against SPY. There’s EEM (EVSPY), TLT (TVSPY) and GLD (GVSPY). And for good measure, there’s a play on C vs. XLF (CVXLF).

Not sure I totally see the demand to play C vs. financials, but the others do have some appeal imho. Obviously you can construct any of these on your own. And in any form you want. You can go long AAPL calls vs. short SPY, long AAPL calls vs, short SPY calls, long AAPL puts vs. SPY puts, or…….you get the idea. The “Alpha” Index itself gets you essentially long one stock vs. short the other. If you want an option play, it clearly makes life easier to use “Alpha” options. If you use calls (or puts) on both, you not only have bet on direction, you’ve also bet on the relationship of volatility of one to the other. So an “alpha” bet adds a layer of simplicity.

The catch? Well, who knows the liquidity. I can’t imagine they catch fire so fast. These “alpha’s” are just indices now, and rather ignored ones. Letting the world trade them will generate some attention. But how much, we don’t know.

Also, they’re European exercise and cash settled, for the obvious reason that there’s nothing to deliver just yet. That works fine sometimes, well at least until you start getting the big players in messing with settlement prices. The plus side though is that an index base will not have the inevitable problems that an ETF or ETN will encounter. Such as fees, and problems tracking the underlying.

All in all I find this a very interesting idea. Not sure I’d go trade these so fast though. Wait and see if they get some traction.