Cboe Global Markets, Inc. CBOE

Key data

The business

Cboe runs the largest US options exchange, and it owns the crown jewels: options on the S&P 500 (SPX) and the VIX volatility gauge, exclusively licensed, cash-settled, and listed on no other venue on earth. Around that sit multi-listed options, cash equities in the US, Europe and Asia, futures, an FX platform, and a growing recurring business selling market data and access. The moat is two-layered: the S&P 500 and VIX exclusivity, and the liquidity network beneath it, order books so deep a rival cannot bootstrap the same fills. A portfolio manager hedging a book buys an SPX put that settles in cash the next morning, and there is nowhere else to buy it. Management is pruning the edges, with Cboe Canada and Cboe Australia now classified as held for sale under a strategic realignment.

The numbers

The story is operating leverage riding a volatility tailwind. Net revenue (total revenue less the pass-through liquidity and routing costs) and profit have both stepped up hard through the choppy first half of 2026.

Q1 2026 was the record: profit up 54% on the year as volatility spiked. Q2 held nearly all of it, net revenue up 24.6% and EPS up 50% against Q2 2025, a touch below Q1's peak sequentially. Adjusted EPS beat the estimate every quarter for four straight, $3.56 versus $3.48 last quarter.

FY2022's collapse to $2.19 was a one-time goodwill write-down on the abandoned digital-assets push, not the business breaking. Look through it: net revenue compounded 13.3% a year from 2021 to 2025, and diluted EPS 20.6%, the gap being margin. The market prices the H1 2026 earnings as a volatility peak that must normalize down; the read here is that the trough is structurally higher than last cycle, and the one print that settles it is H2 2026 index-options ADV.

Operating leverage is the whole argument, and it confirms the read from two days ago held, that proprietary index pricing power, not headline volume, does the work:

Year-on-year in Q2, an extra $144M of net revenue dropped $137M of operating income, a 95% incremental margin. That is the index franchise, where the cost of one more SPX contract is close to zero.

Management

Insiders sold about $0.8M over the last year and bought nothing, the largest a director trimming twice, with plan status not disclosed on the filings. Immaterial against a $31B company. The capital picture is a fortress with an unspent war chest: cash of $2.28B against $1.44B of long-term debt, net cash, interest covered 33 times. Buybacks are light and shrinking, $67M in FY2025 against $205M the year before, while cash has more than doubled from $920M at end-2024 to $2.28B by mid-2026. That reads as dry powder for a deal or a coming payout, not shareholder generosity yet, and it is the one thing the record earnings have not yet been turned into.

How it fails or surprises you

Volatility regime turns calm. SPX and VIX volume is fuel that arrives with fear. H1 2026's records rode a jittery spring; a long calm stretch like 2017 drains the highest-margin transaction line fast, and a 65% operating margin cuts both ways coming down. Watch monthly index-options ADV: two or three quarters below the H1 run-rate confirm the peak.

Structural options growth (right tail). The read the market underweights: same-day (0DTE) SPX options and retail access are a secular step-up, not a spike. If index ADV holds near H1 levels into a calmer tape, the peak-earnings discount is simply wrong, and a stock at a twelve-year-low cash multiple re-rates on rising, stickier volume. Watch index ADV holding through a genuinely low-VIX month.

The cheapness nobody trusts. Record earnings, 50% EPS growth, yet EV/EBITDA sits at the 8th percentile of twelve years. The market is calling this peak. The read is wrong if H2 2026 ADV reverts toward 2024 levels and margins slip back toward 58%, making 23x a full price on normalized earnings, not a bargain. First tell: the September and October volume reports.

Closing thoughts

The market is pricing H1 2026 as a volatility peak; H2 index-options volume settles whether that's right. The tension is already priced: record profit meets a twelve-year-low cash multiple. Hold the volume and the discount was wrong, earnings compound off a higher base. Revert to 2024 levels and forward EPS normalizes, making today's 23x fair rather than cheap. The left tail, a 2017-style calm, is real and arrives fast; the right tail, the shift to same-day index options, is slower but structural. On balance the right tail looks fatter, because 0DTE is a behavior change, not a mood. What's at risk if volume normalizes is a de-rate on lower forward EPS, call it a fifth of the multiple; what the upside is worth is a re-rate off the 8th percentile toward mid-range on flat-to-up earnings.

The bet is still that Cboe keeps its exclusive hold on S&P 500 and VIX options and that traders keep using them more each year. It breaks if the crowd stops trading them when markets calm, and the one pair to watch is monthly index-options ADV against the H1 2026 run-rate: hold it and the earnings are real, lose it and the multiple was telling the truth.