Bloomberg News

CBOE Profit Beats Estimates as Trading Volume Reaches Record

November 04, 2011

(Updates with reiterates forecast in second paragraph, analyst comment in fourth, revenue in eighth.)

Nov. 3 (Bloomberg) -- CBOE Holdings Inc., the biggest U.S. options market by volume, reported third-quarter profit that beat analyst projections as options trading volume surged.

Earnings excluding some items were 50 cents a share, exceeding the 45-cent average estimate of analysts surveyed by Bloomberg whose estimates ranged from 40 cents to 48 cents. Trading volume rose 47 percent to a record 5.48 million contracts per day, on average, the company also said. CBOE reiterated full-year expenses would be about $170 million to $173 million.

U.S. options volume surged last quarter as the European debt crisis and U.S. downgrade sent volatility higher. CBOE, the largest of nine American options markets, saw the most trading ever in August for its exclusive options on the so-called VIX gauge of volatility, which accounts for about 10 percent of revenue, according to Macquarie Group Ltd.

“The results were good, with above-consensus EPS and above-consensus revenue,” said Ed Ditmire, an analyst at Macquarie in New York. “The company showed great growth, with operating profit up 53 percent year over year and 27 percent versus the last quarter.”

The stock rose 2.7 percent to $25.89 today in New York, extending the gain for 2011 to 13 percent so far, compared with a year-to-date drop of 14 percent for the Bloomberg World Exchanges Index that includes CBOE and 24 of its peers.

Options volume was 32 percent higher in August than the prior monthly record from March of 417 million contracts, which followed Japan’s earthquake. That month also saw a weekly record of 151 million options on stocks, indexes and exchange-traded funds, including four of the highest volume days ever.

VIX Futures

Volume for futures on the VIX, which measures the cost of using options as insurance against declines in the Standard & Poor’s 500 Index, reached its highest level ever on Aug. 8 and the third quarter was its biggest ever, according to data compiled by Bloomberg. CBOE is the exclusive venue for options based on the VIX and the S&P 500.

Net income for common stockholders more than doubled to $40.6 million, the Chicago-based company said today in a statement. Revenue climbed to $143.6 million, exceeding the average analyst estimate of $142.8 million, according to data compiled by Bloomberg.

CBOE Stock Exchange, the equity market owned by CBOE and a group of brokers, agreed to buy National Stock Exchange Inc. last quarter for an undisclosed price. NYSE Euronext, which operates three stock platforms, reported third-quarter profit today that beat analyst estimates by 1.6 percent, according to Bloomberg data. Nasdaq OMX Group Inc., a smaller NYSE Euronext rival, had quarterly earnings that matched estimates, according to a release Oct. 26.

--With assistance from Jeff Kearns in New York. Editors: Joanna Ossinger, Stephen Kleege

To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net


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