Cboe beats profit estimates on options trading boom
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A logo for CBOE (Chicago Board Options Exchange) Global Markets is seen at their headquarters in Chicago, Illinois, U.S., April 11, 2024. REUTERS/Jim Vondruska
Feb 6 (Reuters) - Cboe Global Markets beat Wall Street estimates for fourth-quarter profit on Friday, as elevated market volatility boosted options trading volumes at the exchange operator.
Markets have seen a surge in volatility in recent months, fueled by uncertain trade policies and heightened geopolitical tensions, leading traders to take more bets and hedge their positions.
Exchanges across Wall Street, including CME Group, Nasdaq and NYSE-parent Intercontinental Exchange, have reported strong quarterly results, buoyed by the higher volumes.
Cboe's total options market share, however, fell to 29.2% sequentially from 30.9%.
The company provides trading platforms for equities and derivatives, including products linked to its flagship VIX volatility index, often referred to as the market's "fear gauge."
Net revenue from its options trading arm jumped 34% to $433 million in the quarter as total average daily volume in options rose 24%.
The exchange is streamlining its businesses to focus on high-growth areas like prediction markets and crypto amid increasing competition for market share.
Reuters reported earlier this week that Cboe is in the early stages of exploring a product that would use an options structure to offer all-or-none payouts, a move that would position it to compete with fast-growing prediction market platforms.
The exchange is also narrowing its focus on core offerings with the recent plans to exit its businesses in Australia and Canada, a move that followed its decision to wind down the Japanese equities business last year.
Adjusted profit of $3.06 per share beat analysts' average estimate of $2.94, according to data compiled by LSEG. Revenue rose to a record $671.1 million, also topping expectations of about $660 million.
Shares of the exchange were down about 2.3% in morning trading.
(Reporting by Pragyan Kalita and Utkarsh Shetti in Bengaluru; Editing by Leroy Leo)
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