Bishop Research and Analytics
Research analyst, long/short equity, deep value, long-term horizon

CBOE Holdings: Strong Growth, Large Moat, And A Call Option On Volatility

Investment Thesis Summary

CBOE Holdings (NASDAQ:CBOE) operates the largest options exchange in the U.S. and the company's core earnings are generated by transaction fees from options and futures on its proprietary index products. These index products are the main drivers of CBOE's exceptional earnings per share growth of 31.46 percent CAGR since the exchange became a publicly-traded company in 2010. The organic growth of its proprietary index options franchise is even more impressive when taken in the context of the historically low volatility for financial markets in 2012. This makes this opportunity to purchase underpriced CBOE shares at a discount to quarterly earnings growth all the more compelling after the exchange reported record-breaking volume in early October for...

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