Flow Traders, which uses swings in stocks and exchange traded funds (ETFs) to generate profits using high-frequency trading, slumped in 2017 as volatility gauges in the U.S. and Europe hit all-time lows.

But after a stock-market sell-off that triggered the biggest rise ever in the VIX volatility index <.VIX>, its shares have rebounded more than 50 percent in the last two weeks, making it one of the best-performing companies globally at a time when equity markets have been falling.

Flow Traders bounces back as volatility spikes - http://reut.rs/2BZpWHz

Flow Traders is fast becoming a bellwether for whether or not market turbulence will continue.

It reported solid fourth-quarter earnings on Feb. 9, and said it had started 2018 well.

The market sell-off of Feb. 5 and 6 had in part contributed to "already a record quarterly result, and the quarter is not over yet," a spokesman said on Thursday.

Mike Clements, a senior portfolio manager at SYZ Asset Management who owns shares in the company, said it was "basically a call option without paying a premium: it's an open ended option on volatility, and it's now playing out.

"We still think there is a good upside from here."

Investment bank UBS downgraded its rating on Flow Traders to "hold" in September, saying becalmed markets had hurt it. On Thursday it upgraded back to "buy", saying higher volatility was here to stay.

"Even though shares in Flow Traders have increased by nearly 50 percent over the past one-and-half weeks, we still expect further upside as the firm benefits from a more volatile environment in 2018," the bank's analysts said.

(Reporting by Alasdair Pal and Julien Ponthus; editing by John Stonestreet)

By Alasdair Pal and Julien Ponthus