Cboe Global Markets, Inc.

Overview

A Keith Gill / Roaring Kitty-style contrarian deep value and narrative analysis of Cboe Global Markets (CBOE). The stock is not a classic hated net-net; it is a cash-rich exchange operator where the market is debating whether its index-options franchise is a durable compounding moat or a peak-volume cyclical. We stress-test the bear case, balance sheet, optionality, and catalysts.

The Bear Case

The skeptical consensus calls CBOE a quality business with limited visible growth and concentration creep. The obvious problems: options market share slipped to 30.0% in Q2 2026 from 30.2% a year earlier and 31.1% in Q1 2025; U.S. equities market share fell to 9.4% from 10.5%; futures grew only 2% year over year. The single biggest worry is concentration: approximately 68% of total revenues less cost of revenues comes from options and futures, the majority from exclusively licensed indices, mainly S&P 500 index options. Bears argue that 0DTE SPX retail volume is fad-like, the 2032 SPX competition debate threatens the moat, and rising competition from Nasdaq, MIAX, MEMX, wholesalers and prediction platforms will compress revenue per contract. Near-term costs are rising: capex guidance was raised to $98-108 million from $73-83 million for clearing and infrastructure, and a $650 million debt maturity hits Q1 2027. Seeking Alpha has labeled CBOE a 'Perennial Hedge Stock, Lacking Growth Drivers.' In short, the bear view is: great margins, but the market is pricing peak retail options activity.

The Bull Case

The contrarian thesis is that the market is treating CBOE as a low-growth exchange while it is actually a mission-critical tollbooth on a secular retail options boom. Q2 2026 net revenue hit a record $731.6 million, up 25% year over year; adjusted diluted EPS was $3.56, up 45%; adjusted operating EBITDA margin reached 72.2%, up 640 basis points. Index options ADV rose 32% and multi-listed options ADV rose 24%, while total options revenue per contract increased 6% to 31.7 cents. The repeal of the pattern day trader rule has already lifted retail engagement: estimated retail share of SPX 0DTE volume rose to 57% in June, with SPX ADV up 3.5%, XSP ADV up 36%, and multi-list options ADV up 4% month-over-month. Management has raised 2026 organic net revenue growth guidance twice, now to mid-to-high teens. The realignment is a genuine margin story: workforce reductions of roughly 20%, annualized cost savings of $100-120 million, and the sale of Cboe Australia and Cboe Canada for about $300 million sharpen the portfolio. Optionality is the hidden kicker: Cboe Predicts prediction markets, SEC-filed company KPI contracts covering 23 major companies, Schwab distribution, extended-hours options, 23x5 equities, clearing expansion, and tokenization. At a forward P/E of 19.4 against 15-20% growth, the stock is not screaming cheap, but it is a high-margin compounder with call options on new markets that the bear narrative gives little credit.

Fundamental Deep Dive

Sentiment & Technical Setup

Catalyst Analysis

Near-term catalysts include the completion of the Cboe Australia sale and eventual Cboe Canada close, which sharpen focus and provide about $300 million of proceeds; a likely third-quarter dividend increase, given CBOE's history of raising its payout; and the SEC decision on company KPI event contracts, which target a late September/early October 2026 launch. Schwab is expected to begin offering Cboe Predicts contracts soon, providing an anchored distribution partner. Longer-term catalysts include the launch of 23x5 U.S. equities trading in December 2026, extended-hours single-stock options, Cboe Clear US registration as a covered clearing agency, tokenization initiatives, and any favorable SEC market-structure changes such as the proposed withdrawal of Rule 611. Each catalyst is about expanding the addressable market beyond the current SPX franchise, which is exactly what the bear case is underweighting.

Key Risks

Conclusion

CBOE is not a deep value net-net, and it is not a heavily shorted squeeze candidate. It is a high-quality, cash-generating exchange with a dominant index-options franchise, improving recurring data revenue, and a new management team cutting costs and reallocating capital. The market's bearish skepticism centers on concentration and peak retail volumes, but the actual results show broad-based record revenue, expanding margins, rising guidance, and multiple untapped product opportunities. At 19.4x forward earnings with mid-teens revenue growth, net cash, and optionality in prediction markets and clearing, the risk/reward skews positive. I would rather own the toll booth on the options boom than short it because the market is afraid the moat might expire.

Overview

Magic Formula-style analysis of Cboe Global Markets (CBOE) using Joel Greenblatt's two-factor framework: earnings yield (EBIT / enterprise value) to assess cheapness and return on capital (EBIT / (net working capital + net fixed assets)) to assess business quality. The report uses the provided August 2026 price data, Q2/H1 2026 financials, and qualitative competitive/regulatory sources.

Business Quality Assessment

CBOE is an exceptional business. It operates the largest U.S. options exchange complex with roughly 30% market share, proprietary SPX/VIX index options, a global equities/FX franchise, and a recurring Data Vantage business. Adjusted Q2 2026 operating margin was 70.4%, adjusted EBITDA margin 72.2%, and Q2 net revenue rose 25% Y/Y to a record $731.6M. TTM EBIT is estimated at about $1.84B. Using Greenblatt's tangible invested capital (accounts receivable + other current assets + PP&E, less non-debt current liabilities, excluding customer margin deposits) of roughly $0.54B, ROC is approximately 340%. Even including goodwill/intangibles, ROC is roughly 39%, still excellent. Returns are high because the exchange model requires little tangible capital, has proprietary index licensing, network effects in liquidity, and sticky data/access revenues.

Valuation Analysis

Enterprise value is about $29.98B: market cap $30.93B + total debt $1.44B - cash and financial investments $2.39B. Estimated TTM EBIT of $1.84B gives an EBIT/EV earnings yield of about 6.1%. Trailing P/E is 23.1 and forward P/E is 19.4; dividend yield is about 0.98%. Against likely long-term bond yields of roughly 4.5-5%, a 6.1% pre-tax earnings yield is acceptable but not a deep discount. On pure cheapness, CBOE is not in deep-value territory; the magic formula return will depend mainly on its exceptional ROC.

Magic Formula Ranking

Normalized Earnings Analysis

Record earnings are somewhat above mid-cycle: Q2/H1 2026 benefited from 0DTE/index options volume records, the repeal of the pattern day trader rule, strong retail engagement, Data Vantage new-sales strength, and a spike in volatility in March. Reported GAAP earnings also include strategic realignment/severance costs; Q2 2026 adjusted EPS was $3.56 vs $3.35 GAAP. A normalized EBIT is likely in the $1.70-1.90B range. Divesting Canada/Australia removes about $60-70M of annual net revenue and $40-50M of expenses, a modest net EBIT headwind. Capital expenditures are rising to $98-108M for clearing infrastructure, but adjusted D&A is only $54-58M; free cash flow remains strong and supports dividends/buybacks.

Why The Market Is Wrong

The market worries about SPX/VIX exclusivity ending around 2032, declining options/U.S. equities market share, competitive event contracts, and dependence on retail/0DTE volumes. These are real, but the bear case may overemphasize market share percentage while missing growing industry volume, mix shift toward high-margin index options, CBOE's floor/broker/technology ecosystem, recurring Data Vantage, and global distribution. The strategic realignment is simplifying the business and expanding margins. If normalized EBIT is near $1.9B and the franchise remains intact, CBOE is not expensive; however, at $296 the market is already pricing in a lot of good news, so this is less a market mispricing and more a quality compounder at a moderate price.

Key Risks

Conclusion

CBOE is exactly the type of high-quality business Greenblatt likes: dominant market position, proprietary products, recurring data revenue, high margins, and a very high return on tangible capital. But the Magic Formula also requires buying cheap. At an estimated 6.1% EBIT/EV yield, CBOE is reasonably priced, not deeply cheap. It likely ranks well on combined quality and value but is not a clear top-decile bargain at $296.14. A disciplined Magic Formula investor should keep it on the screened list and wait for a better entry rather than chase the recent earnings strength.

Overview

This is a Peter Lynch-style fundamental analysis of Cboe Global Markets, Inc. (CBOE), using recent earnings reports, SEC filing summaries, and market commentary to evaluate the business as a tollbooth-like exchange franchise with an options-volume growth story.

The Two-Minute Story

Cboe runs the largest U.S. options exchange and owns the most important proprietary index products, especially S&P 500 index options and VIX volatility products. Every time a trader, hedge fund, or retail investor buys or sells an option, Cboe collects a small toll. Retail options adoption has exploded, zero-day-to-expiry options are booming, and Cboe also sells data and access to its markets, which is a recurring, high-margin side business. The company is focusing back on its core derivatives franchise, selling non-core Canadian and Australian equities businesses, cutting costs, and pushing into event contracts and prediction markets. In plain English, Cboe is the toll bridge for the options boom.

Stock Category

Do You Understand This Business?

Yes. Cboe operates exchanges and clearing platforms for options, equities, futures, and FX. It makes money from transaction fees, clearing fees, market data subscriptions, and access/capacity fees. A regular investor can understand this: it is a market utility that connects buyers and sellers and charges for the privilege. The edge is that Cboe has proprietary products, especially SPX and VIX options, that competitors cannot easily replicate, plus a trading-floor ecosystem, retail broker distribution, and strong data relationships. If you understand trading volume, bid-ask spreads, and why options are growing among retail investors, you understand the thesis.

PEG Ratio Analysis

Lynch's Checklist

Tenbagger Potential

No, a 10x from a $31 billion market cap is unrealistic. To 10x, Cboe would need to become a $310 billion company, which would require an extraordinary total addressable market shift and likely dominance in entirely new markets such as prediction markets, tokenization, and clearing. This is not a likely tenbagger. Cboe can still be a very good investment through compounding, but Lynch would say you buy small unknown companies for 10x, not large exchange operators.

Key Risks

Conclusion

Peter Lynch would appreciate that this is an understandable, tollbooth-like business with attractive economics. Cboe has a dominant options franchise, high operating leverage, a clean balance sheet, recurring data revenue, and a clear story: every contract traded pays a toll. The recent growth is impressive, and the strategic realignment under new management is exactly the kind of focus Lynch liked, selling non-core businesses and concentrating on the best franchise. However, Lynch would also note that the stock is not unknown, not deeply cheap, and not a tenbagger. The PEG is near 1, which is fair, but the ideal Lynch purchase is a boring, underfollowed company at a discount. Cboe is a high-quality business at a reasonable price. A patient investor can own it, but should expect volatility and should not chase after a big run.

Overview

This is a Druckenmiller-style top-down macro and reflexivity analysis of Cboe Global Markets as of August 16, 2026. It evaluates Cboe as a volatility-and-liquidity toll booth benefiting from secular options adoption and regulatory shifts, analyzes the reflexivity embedded in its SPX/0DTE franchise, and assesses whether the current price offers an attractive asymmetric entry for an opportunistic, conviction-weighted position.

Macro Context

The macro environment is late-cycle but not yet clearly recessionary. Elevated geopolitical shocks, including the March 2026 Iran-U.S. escalation, are producing episodic volatility rather than sustained risk-off. Central banks remain data-dependent, with inflation and growth uncertainty keeping demand for hedging elevated. The dominant secular force is the democratization of short-dated options and event contracts, amplified by the repeal of the U.S. pattern day trader rule, SEC moves toward extended trading hours, and market-structure reform. These conditions favor exchange operators with proprietary volatility products, retail distribution, and clearing/data infrastructure.

Company Position in Macro Landscape

Cboe is a primary beneficiary. It operates the largest U.S. options exchange complex with approximately 30% market share and holds exclusive index options tied to SPX and VIX, where average daily volume and revenue per contract are rising. In Q2 2026, total net revenue increased 25% year-over-year to a record $731.6 million, and derivatives net revenue grew 30%. Its Data Vantage segment, a recurring and higher-margin revenue stream, grew 15% in the same period. Cboe is also expanding into event contracts, company KPI contracts, clearing, and tokenization while selling lower-return Canadian and Australian businesses to refocus the portfolio.

Reflexivity Analysis

The core positive feedback loop is volatility and retail engagement driving SPX and 0DTE volume, which tightens spreads, attracts more brokers and liquidity providers, and feeds Data Vantage access and data subscriptions, supporting margin expansion and higher guidance. The repeal of the pattern day trader rule has already produced an immediate retail volume uplift. A second loop is distribution: retail platforms such as Robinhood, Schwab, and Webull want regulated event contracts, pulling Cboe product adoption through existing infrastructure. The main reflexive risk is the same loop in reverse. If volatility compresses or regulatory setbacks occur, volume, revenue per contract, and data demand could decelerate together. The stock currently trades about 20% below its 52-week high, suggesting the market has not fully re-rated for raised guidance and event-contract optionality.

Competitive Position & Disruptive Threats

Cboe retains the leading U.S. options market share at roughly 30%, versus Nasdaq around 27% and NYSE/ICE around 17.6%. Its moat includes SPX and VIX product exclusivity, a hybrid floor and electronic ecosystem, broad retail broker connectivity, and proprietary data. However, options market share has eroded modestly from prior years, U.S. equities share is below 10%, and futures growth is weak. Disruptive threats include competition for SPX listing rights after 2032, competing prediction platforms, perpetual futures, and exchange fragmentation. Cboe is responding with Cboe Predicts, company KPI event contracts for 23 large firms, extended trading hours for single-stock options, and investments in clearing and tokenization.

Asymmetric Risk/Reward

At $296.14, Cboe trades at about 19.4x forward EPS and 23.1x trailing EPS. If management's mid-to-high-teens revenue growth and operating leverage continue, forward EPS of $15.25 could grow toward the high teens, supporting a move back toward the 52-week high of $371, roughly 25% upside. Downside is cushioned by the 200-day average near $281 and the 52-week low at $227.15, about 5% and 23% below, respectively. The setup is not deeply convex, but it is skewed positive because the core franchise is accelerating and new product optionality is not fully reflected in consensus estimates. The dividend yield near 1% and a strong balance sheet with about $2.3 billion in cash provide secondary support.

Key Risks

Investment Details

Overview

This is a Warren Buffett-style analysis of Cboe Global Markets (CBOE), focused on whether the business is understandable, competitively advantaged, financially strong, and available at a price offering a margin of safety relative to intrinsic value.

Business Understanding

Cboe is a simple and understandable toll-road business. It operates derivatives, equities, and FX exchanges, with the economic heart in U.S. options, especially proprietary index options such as SPX, XSP, VIX, and RUT. The company earns transaction and clearing fees, access and capacity fees, and recurring market data revenue through its Data Vantage segment. The model is within a conservative investor's circle of competence: Cboe does not take directional market risk; it collects fees on volume, connectivity, and data. Complexity exists around options market structure and regulation, but the core economics are straightforward.

Economic Moat Analysis

Cboe has a wide but not unassailable moat. Its SPX and VIX franchises benefit from exclusive index licenses, decades of liquidity, large open interest, 34 retail broker platforms, 11 floor broker groups, and 20 market-making groups. Liquidity attracts order flow, which improves pricing and data, which attracts more flow. Switching costs are high, and regulatory licenses create barriers to entry. Data Vantage adds recurring, sticky revenue. However, the moat requires vigilance: U.S. options market share was 30.0% in Q2 2026, down slightly from 30.2% a year earlier; competitors include CME, Nasdaq, ICE, MIAX, and MEMX; and SPX exclusivity could face challenges around 2032. The moat is durable but not risk-free.

Management Quality

CEO Craig Donohue has brought much-needed focus. Management is exiting non-core businesses, selling Cboe Canada and Cboe Australia for about $300 million, and reducing the workforce by roughly 20% to target $100 million to $120 million in annualized expense savings. Shareholder returns are solid: 15 consecutive years of dividend increases, a $0.72 quarterly dividend, and resumed share repurchases. The prior management allowed expenses to grow too quickly during 2020-2024, but current capital allocation appears more disciplined. The key test is whether the strategic realignment produces durable savings without damaging the core franchise.

Financial Strength

Cboe is financially very strong. It has $2.28 billion in cash and cash equivalents against $1.44 billion in total debt, giving a net cash position and leverage of about 0.7x. Q2 2026 adjusted operating margin was 70.4% and adjusted EBITDA margin was 72.2%; Q1 2026 adjusted EBITDA margin was 74.2%. TTM EPS of $12.82 against book value of $53.81 implies a return on equity near 24%. Revenue and profit growth have been broad-based, with Q2 2026 net revenue up 25% and adjusted EPS up 45%. Free cash flow is strong, though 2026 capex guidance was raised to $98-108 million. A $650 million debt maturity in Q1 2027 is manageable but worth monitoring.

Intrinsic Value Assessment

Using the provided data, TTM net income is approximately $1.34 billion ($12.82 EPS times 104.4 million shares). Adding depreciation and amortization of about $115-120 million and subtracting roughly $100 million of capital expenditures gives owner earnings of about $1.35-1.40 billion. Against a market cap of $30.9 billion, that is about 22-23x owner earnings. On forward EPS of $15.25, the stock trades at about 19.4x. Applying a 20-24x multiple to forward EPS yields a fair value range of roughly $305-366 per share; applying the same multiple to conservative owner earnings yields about $268-322 per share. At the current price of $296, Cboe appears fairly valued with little margin of safety. A better entry would likely exist below $250.

Key Risks

Investment Details

Overview

This report applies William J. O'Neil's CAN SLIM methodology to Cboe Global Markets, Inc. (CBOE) as of August 16, 2026. It evaluates quarterly and annual earnings growth, new products and catalysts, supply and demand, leadership, institutional sponsorship, and market direction using the structured financial data and research sources provided.

Financial and Business Overview

Cboe Global Markets is a leading global exchange operator, with a dominant U.S. options franchise, proprietary index options such as SPX and VIX, European equities, futures, global FX, clearing, and the Data Vantage market data and access business. Q2 2026 results were strong: record net revenue of $731.6 million, up 25% year over year; adjusted diluted EPS of $3.56, up 45%; GAAP diluted EPS of $3.35, up 50%; and adjusted operating margin of 70.4%. For the first half of 2026, diluted EPS was $7.01 versus $4.60 in the prior-year period. Balance sheet quality is high: cash and cash equivalents of approximately $2.28 billion, total debt of about $1.44 billion, adjusted cash of $2.35 billion, and leverage of 0.7x. Trailing EPS is $12.82, forward EPS estimate is $15.25, and the stock trades at about 19.4x forward earnings. The dividend is $2.88 per share, yielding approximately 0.98%.

Market Position & Competitive Advantages

Cboe is the largest U.S. options exchange operator, with approximately 30% market share, though this is down modestly from 31.1% in Q1 2025. Its core advantage is the exclusive-license proprietary index complex, especially SPX options and VIX options, which generate significant derivatives revenue and cannot be easily replicated. The company also benefits from a hybrid electronic and open-outcry trading floor, deep retail and institutional distribution, Data Vantage recurring revenue, and strong regulatory trust. However, there is meaningful concentration risk: approximately 68% of total revenues less cost of revenues comes from options and futures segments, with the majority tied to exclusively licensed indices. Competition from CME, Nasdaq, ICE, MIAX, and emerging prediction-market platforms is intense, and Cboe's U.S. equities market share has declined.

Stock Performance

CBOE trades at $296.14, up about 20.4% over the past year. It is above its 50-day moving average of $275.98 by roughly 7.3% and above its 200-day moving average of $281.55 by roughly 5.2%. The 52-week range is $227.15 to $371.18, so the stock remains about 20% below its high. After Q2 earnings on July 31, 2026, the stock initially surged 4.6% to about $310 before fading to current levels. Recent 10-day average volume of about 801,000 shares is below the three-month average of about 1.44 million, suggesting lower participation on the most recent pullback rather than heavy distribution. Technically, the stock is in an uptrend above key moving averages but is not acting as a new-high leader.

CAN SLIM Analysis

Key Risks

Conclusion

Under CAN SLIM, CBOE passes the C and A criteria convincingly, with quarterly EPS growth near 45-50% and a strong annual earnings record. The N component is also favorable because of new management, strategic realignment, prediction-market products, KPI event contracts, and extended trading hours. The S and I components are moderately supportive, given buybacks and broad institutional interest, but volume participation has recently been below average. The L component is mixed: CBOE is a fundamental industry leader and has outperformed some peers, but it is not near a new high. O'Neil's methodology generally avoids buying stocks that are 20% below their 52-week high after a post-earnings fade. A better approach is to wait for the stock to form a sound base and break above the post-earnings area near $310 on above-average volume. Therefore, CBOE is a high-quality stock to watch, but not an immediate CAN SLIM buy at this price.