Nasdaq OMX Group (NDAQ) has a green light from regulators to list a new type of derivative that lets investors bet on the performance of popular stocks like Apple Inc. (APPL) or Citigroup Inc. (C) versus the broader market.

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 first batch of what are generically called "relative performance options" compare Apple, the SPDR Gold Trust (GLD), the iShares MSCI Emerging Markets Index Fund (EEM), and the iShares Barclays 20+ Year Treasury Bond Fund (TLT) to the SPDR S&P 500 exchange-traded fund (SPY). Also in the first group is an index that compares Citigroup versus the Financial Select Sector SPDR Fund (XLF).

The values of the indexes, when launched in October, were set at 100. The better or worse the stock performs versus the benchmark, the higher or lower goes the index.

Nasdaq hasn't announced a launch date for the options, though it said in October it planned to commence trading in early 2011 on its PHLX exchange in Philadelphia.

The severe stock-market gyrations of the financial crisis and last year's "flash crash" spurred greater interest in vehicles to track stock-market volatility and "trade" it. Correlation also rose in those periods, prompting Wall Street's efforts to list ever more complex volatility products on exchanges.

The options are slated to be cash-settled and European-style, meaning no physical shares change hands and closing transactions are handled on the date of expiry, according to the SEC filing.

Nasdaq officials were not immediately available to comment.

-By Brendan Conway, Dow Jones Newswires; (212) 416-2670; brendan.conway@dowjones.com