On October 9, 2026, Morgan Stanley analyst Michael Cyprys did something sell-side analysts rarely do: he moved Cboe Global Markets (CBOE) straight from Underweight to Overweight, skipping the neutral step entirely, and lifted his price target from $258 to $358. The stock rose about 3.6% in premarket trading on the call. The trigger was the Cboe S&P 500 options license extension announced on September 29: a 25-year renewal of Cboe’s exclusive right to list S&P 500 Index (SPX) options, now running through 2051.
To understand why that matters, look at what happened to the stock this year. Cboe hit a 52-week high of $371.18 in May. Then, at the end of May, the Commodity Futures Trading Commission (CFTC) approved perpetual crypto futures on domestic, regulated U.S. exchanges. Investors started to worry that perpetuals, contracts with no expiry date, could eventually spread to equity indices and pull retail traders away from short-dated options. Cboe fell 9% on June 2 alone and, according to Zacks, lost 28.4% in a single month through late June. That was steeper than CME Group (-15.8%), Intercontinental Exchange (-14.1%) and Nasdaq (-9.2%) over the same window. The 52-week low was $227.15.
At the latest close of $304.16, Cboe is roughly 34% above that low but still about 18% below its May high. The question for investors is simple: with the license risk gone, is the remaining discount an opportunity, or does the market still have reason to be cautious?
Three key investment points:
1. The license overhang is gone for a generation. SPX options are the core of Cboe’s profits. In Q3 2026, index options earned a preliminary $0.952 per contract, versus $0.052 for multi-listed equity options, about 18 times more. Renewing the exclusive license through 2051 secures the cash flow that anchors Cboe’s valuation. Management says the new royalty terms, which take effect in 2027, will have a “de minimis” impact on 2027 net revenue growth.
2. The business is running ahead of its own plan. In February, Cboe guided 2026 organic net revenue growth to “mid single-digit.” By the Q2 report it had raised that to “mid to high teens.” Q2 net revenue hit a record $731.6 million (+25% YoY), adjusted EPS reached $3.56 (+45%), and the adjusted operating margin expanded to 70.4%.
3. But the valuation already prices much of the good news. At 20.1x forward earnings ($15.11 consensus EPS next year), Cboe is no longer the bargain it was in June. Our base-case fair value is $317, only about 4% above the current price. The perpetual futures threat has not gone away, and royalty economics after 2027 are still undisclosed.
This article covers Cboe’s business model and segment mix, the industry structure behind index options, its moat, five years of financials, a scenario valuation, the main risks, and a concrete entry and exit plan.
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1. Company Overview: How Cboe Makes Money from the S&P 500
Cboe Global Markets runs exchanges. It earns money every time a contract or share trades on its venues, and it sells market data, index licenses and access services on top of that. The company reports net revenue, which is gross revenue minus cost of revenue (liquidity rebates paid to market makers, routing fees and royalty payments such as those owed to S&P Dow Jones Indices). Net revenue is the figure that best reflects the economic value Cboe keeps.
That distinction matters because headline revenue figures overstate the business. Over the trailing twelve months, Cboe’s gross revenue was about $5.06 billion, while net revenue, by our calculation from company filings, was about $2.74 billion.
Net revenue by segment (Q2 2026):
Segment Q2 2026 Net Revenue Q2 2025 Net Revenue YoY Growth Share of Total Options $473.9M $364.8M +30% 64.8% North American Equities $114.7M $98.4M +17% 15.7% Europe & Asia Pacific $84.8M $70.4M +20% 11.6% Futures $30.6M $30.1M +2% 4.2% Global FX $27.6M $23.6M +17% 3.8% Total $731.6M $587.3M +25% 100%
Source: Cboe Q2 2026 earnings release (SEC Form 8-K). Shares of total are our calculation.
The table makes one point obvious: Cboe is mostly an options company. Nearly two-thirds of net revenue comes from options, and within options the proprietary index products (SPX, VIX, XSP mini-SPX, and Russell 2000 options) earn most of the profit. In Q2 2026, index options average daily volume (ADV) was 6.2 million contracts, up 32% YoY, and total options ADV was 21.9 million contracts.
Cboe Data Vantage, the company’s data and access business, cuts across these segments. It generated $181.6 million of revenue in Q2 2026 (+15% YoY) and $635.5 million in full-year 2025. Data revenue is recurring and subscription-like, which steadies a business otherwise tied to trading volumes.
Key customers and market position. Cboe’s customers are market makers, broker-dealers, institutional asset managers, hedge funds and, increasingly, retail traders who reach it through brokerages. In multi-listed U.S. equity options, contracts that trade on many exchanges, Cboe’s four options exchanges held a 30.0% market share in Q2 2026. In U.S. cash equities, its on-exchange market share was 9.4%. In SPX options, Cboe has no direct competitor because it holds the exclusive license. That exclusivity is what sets it apart from CME Group, ICE and Nasdaq.
Portfolio simplification. Under CEO Craig Donohue, Cboe has been selling non-core assets. The company expected to complete the sale of Cboe Australia in Q3 2026 and announced in October 2025 that it plans to divest Cboe Canada. The aim is a tighter company built around derivatives and data.
Governance and ownership. Cboe is an S&P 500 member with a widely held, institution-dominated shareholder base and no controlling holder. It has raised its dividend for 16 consecutive years. The latest increase, declared for Q3 2026, lifted the quarterly payment 19% from $0.72 to $0.86 per share, an annualized $3.44 and a yield of about 1.1% at today’s price. The company also had $536.8 million left on its buyback authorization as of June 30, 2026.
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2. Industry Analysis: Index Options, 0DTE and the Perpetual Futures Question
2-1. Market Size & Growth Trajectory
Index options have grown rapidly, and Cboe’s own volume data shows how fast. In 2025, Cboe traded 970.6 million SPX options contracts, an ADV of 3.9 million contracts and a 25% increase from 2024. That was the fourth consecutive year of record SPX volume.
Growth has continued into 2026. Q3 2026 SPX options ADV was 4.9 million contracts, Cboe’s second-best quarter ever and about 26% above the 2025 average. September 2026 index options ADV was 6.4 million contracts, up 22.3% YoY.
A major structural change inside SPX is the rise of zero-days-to-expiry (0DTE) options, contracts that expire the same day they trade. SPX 0DTE ADV set a monthly record of 3.4 million contracts in September 2026 and a quarterly record of 3.2 million in Q3. On our math, 0DTE now makes up about 65% of all SPX volume (3.2 million out of 4.9 million). The mini-SPX product (XSP), one-tenth the size and aimed at smaller accounts, also set records: 251,000 contracts quarterly ADV and 274,000 in September.
Where is the industry in its cycle? We think index options are in an acceleration-to-early-maturity phase. Volume is still compounding at double-digit rates, but the base is now large, and Cboe’s year-over-year comparisons get harder from here. Multi-listed options, a more mature market, show this clearly: September 2026 ADV of 15.4 million contracts was up only 0.7% YoY. The growth is concentrated in proprietary index products, which is exactly where Cboe’s pricing power sits.
The economics of the two products are very different. Cboe’s preliminary Q3 2026 revenue per contract (RPC) was $0.952 for index options against $0.052 for multi-listed options. Every SPX contract is worth about 18 multi-listed contracts. A 10% rise in SPX volume therefore does far more for earnings than a 10% rise in multi-listed volume.
2-2. Structural Growth Drivers
Driver 1: Retail participation and the shift to short-dated trading. Over the past five years, retail investors have moved from buying single stocks to actively trading options, helped by zero-commission brokerages, mobile apps and educational content. Short-dated options suit this group because each contract costs little in absolute dollars and responds to the day’s macro news, such as CPI releases, Fed meetings and earnings from the largest index members. SPX 0DTE records month after month show this is a lasting behavior shift, not a one-off spike. XSP extends the funnel by offering smaller contract sizes to accounts that find a full SPX contract too large. Over the long run, the risk is regulatory: if the SEC or FINRA tightens options-approval rules for retail accounts, this driver could slow. Over the next year or two, the trend appears intact.
Driver 2: Institutional hedging and volatility products. Institutions use SPX options for portfolio hedging, overwriting strategies and volatility trading. SPX has structural advantages for this use: cash settlement (no shares change hands), European-style exercise (no early assignment risk), and favorable U.S. tax treatment under Section 1256 (60% long-term / 40% short-term capital gains). These features are written into the product and cannot easily be copied by an ETF option on a multi-listed venue. Growth in options-income ETFs and buffered or defined-outcome funds, which often use index options as building blocks, adds a steady layer of institutional demand. VIX options and futures complement this, since VIX is calculated from SPX option prices. Volatility trading and SPX liquidity reinforce each other.
Driver 3: Pricing power from exclusivity. Because Cboe is the only exchange licensed to list SPX options, it sets prices without direct competition. Total options RPC rose 6% YoY in Q2 2026 to $0.317. Some analysts expect Cboe to raise SPX fees after the new royalty terms take effect in 2027, partly to offset higher royalties. Pricing power on an exclusive product is especially valuable because it needs no new customers.
Driver 4: Data and access monetization. As SPX and VIX volumes grow, the market data generated by those trades becomes more valuable. Cboe Data Vantage grew 15% YoY in Q2 2026, and management raised its 2026 organic growth target to “low teens.” Data revenue renews like a subscription and carries high incremental margins, so it is a quiet but important contributor to margin expansion.
Short-term vs. long-term dynamics. In the near term (6–12 months), Cboe’s results depend heavily on market volatility. 2025 and 2026 have been active trading environments, and a calmer market would slow volume growth. Over the long term (3–10 years), the drivers are structural: retail options adoption, institutional use of index derivatives, and exclusive pricing power that now runs to 2051.
2-3. Competitive Landscape
Company Market Cap P/E (TTM) Forward P/E Operating Margin* ROE Core Moat Cboe (CBOE) $31.76B 23.69x 20.13x 35.28% 26.19% Exclusive SPX/VIX licenses CME Group (CME) $100.88B 23.79x 21.60x 65.10% 15.80% Interest rate & commodity futures clearing Intercontinental Exchange (ICE) $87.68B 22.06x 17.58x 46.06% 13.93% Energy futures, mortgage tech, NYSE Nasdaq (NDAQ) $52.35B 27.29x 20.02x 30.78% 16.54% Listings, financial technology software
Source: Finviz real-time data as of the latest close. \Operating margin is calculated on gross revenue, so companies that pay large liquidity rebates (Cboe, Nasdaq) look structurally lower than CME. On a net revenue basis, Cboe’s 2025 operating margin was 60.4%.*
Several points stand out. Cboe has the smallest market cap of the four, but by far the highest return on equity (26.19% vs. 13.93%–16.54% for peers). It also trades at a forward P/E (20.13x) in line with Nasdaq (20.02x) and below CME (21.60x), even though its earnings are growing faster. Finviz shows Cboe EPS growth of 31.92% this year, against 9.79% for CME.
Why is Cboe better positioned than peers in its niche? CME’s moat is in interest rate and commodity futures. It also offers E-mini S&P 500 futures and options on those futures, which compete with SPX options for some hedging flows, but these are different products with different margin treatment and settlement. ICE and Nasdaq both run multi-listed options exchanges, but neither can list SPX options. For an investor who wants exposure to the growth of index options, Cboe is a direct play.
The perpetual futures threat, examined. The new competitive variable in 2026 is perpetual futures. After the CFTC approved perpetual crypto futures in late May, analysts warned that the products would “create more competition in the retail arena and keep exchange valuation multiples under pressure.” The bear case is that if perpetuals expand to equity indices, a retail trader looking for leveraged, short-term S&P 500 exposure might choose a perpetual over a 0DTE SPX option.
We think the threat is real but overstated for three reasons. First, perpetuals today cover crypto assets. Extending them to equity indices would need further regulatory steps and, in practice, index licenses, and S&P DJI has just committed the S&P 500 options franchise to Cboe for 25 years. Second, options and perpetuals give different payoffs: an option has a capped downside (the premium paid), while a leveraged perpetual can be liquidated. The two products appeal to overlapping but distinct risk appetites. Third, the data so far does not show substitution. SPX 0DTE volume set new monthly and quarterly records in September and Q3 2026, after perpetual futures were approved. Morgan Stanley reached a similar view, calling the concerns “overdone relative to Cboe’s core listed derivatives economics.”
That said, the threat to the valuation multiple is more immediate than the threat to earnings. As long as investors fear disruption, they will hesitate to pay the 22x multiple Cboe has averaged over the past three years.
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3. Economic Moat Analysis
Moat Type 1: Intangible Assets — The Exclusive S&P 500 License
Cboe’s main moat is a contract: the exclusive license from S&P Dow Jones Indices to list options on the S&P 500 Index. The partnership dates back to 1983, when SPX options launched, more than 43 years ago. On September 29, 2026, the two companies extended it by 25 years, through 2051. The agreement also covers the closely linked VIX options and futures franchise and leaves room to work together on new products, including tokenized options contracts, though no specific product or launch date was announced.
The economic value of this license shows up in revenue per contract. Index options earned about $0.952 per contract in Q3 2026 (preliminary), versus $0.052 for multi-listed options. On multi-listed products, Cboe competes with more than a dozen U.S. options exchanges and pays heavy rebates to attract order flow. On SPX, it sets prices as the sole venue.
The license also creates a network effect on top of the legal exclusivity. Because all SPX liquidity sits on one exchange, market makers quote tighter spreads there than they could on a fragmented market, which brings in more traders, which deepens liquidity further. Even if another index provider launched a competing large-cap index option, it would need to rebuild that liquidity from scratch.
What we do not know. Neither company disclosed the new royalty economics. Cboe says only that the 2027 reset will have a de minimis impact on 2027 net revenue growth “when weighed against volume expansion, pricing opportunities and operational execution,” and that future adjustments should be smaller than the 2027 reset. One analyst who kept a Market Perform rating said royalties are likely higher and expects Cboe to respond with SPX price increases. Our reading: the gross royalty bill probably rises in 2027, and Cboe plans to pass much of it on through pricing. That is a reasonable plan for an exclusive product, but it adds execution risk.
Moat Type 2: Efficient Scale and Network Effects in Proprietary Products
Beyond SPX, Cboe owns VIX, a widely cited volatility gauge, and lists options on other proprietary indices such as XSP and Russell 2000 options. These products share an ecosystem: VIX is calculated from SPX option prices, so hedgers who trade VIX also need SPX liquidity, and the other way round. XSP brings smaller traders into the same pricing ecosystem, and some of them later move up to full-size SPX.
The scale advantages show up in margins. Cboe’s adjusted operating margin rose from 61.4% in 2024 to 65.6% in 2025 and 70.4% in Q2 2026. Management cut its 2026 adjusted operating expense guidance from $864–879 million in February to $838–853 million, even as revenue growth beat the original plan. When most of the cost base is fixed technology and staff, incremental volume falls almost entirely to profit.
Cboe’s multi-listed options and cash equities businesses have weaker moats. These are competitive, rebate-driven markets, and Cboe’s position depends on technology and pricing rather than exclusivity. September 2026 U.S. on-exchange equities volume fell 14.7% YoY, a reminder that this part of the business is cyclical and competitive.
Moat Durability Assessment
Will the moat hold for 5–10 years? We think the core SPX moat is now highly durable. The license runs 25 more years, and the liquidity network effect would make the franchise hard to displace even without it. The renewal removes the single largest long-term risk to the company.
Specific risks to the moat:
– Royalty creep. S&P DJI clearly had negotiating leverage. If royalty economics rise faster than Cboe’s ability to raise prices, margins on SPX could narrow even as volumes grow.
– Product substitution. Perpetual futures, prediction markets, or other new instruments could pull speculative retail flow away from 0DTE options over time.
– Regulatory intervention. Regulators have periodically looked at the growth of 0DTE options and retail options trading. Rules that raise account-approval thresholds or margin requirements would hurt volume.
Counterarguments. The royalty risk is partly offset by pricing power: an exclusive product with inelastic institutional demand can absorb fee increases. The substitution risk is partly offset by the structural features of SPX (cash settlement, Section 1256 tax treatment, defined risk) that perpetuals do not copy. The regulatory risk has existed for years without action that changed the volume trend. On balance, we rate Cboe’s moat as wide in index options and narrow in its other businesses.
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4. Financial Analysis
Multi-Year Financial Summary
Fiscal Year Net Revenue YoY Operating Income Op. Margin (net rev.) Net Income to Common Diluted EPS Adjusted EPS 2022 $1,741.7M — $489.6M 28.1% $234.1M $2.19 — 2023 $1,918.0M +10.1% $1,057.9M 55.2% $757.5M $7.13 — 2024 $2,072.4M +8.0% $1,098.4M 53.0% $761.0M $7.21 $8.61 2025 $2,429.1M +17.2% $1,467.1M 60.4% $1,094.8M $10.42 $10.67 H1 2026 $1,460.5M +26.7% $981.6M 67.2% $735.9M $7.01 — TTM (to Q2 2026) $2,737.1M — $1,755.7M 64.1% ~$1,350M $12.84 —
Sources: Cboe 10-K data via SEC XBRL (net revenue = revenue less cost of revenue), Q4 2025 and Q2 2026 earnings releases; TTM EPS from Finviz. TTM net revenue and operating income are our calculation (FY2025 − H1 2025 + H1 2026). Margins and growth rates are our calculations.
The Story Behind Each Year
2022: impairment year. Net revenue was about $1.74 billion, but operating income of $489.6 million and diluted EPS of $2.19 were held down by a large goodwill impairment tied to Cboe’s digital-asset unit. The underlying exchange business stayed solidly profitable. This year is a reminder of the cost of diversifying away from the core.
2023: normalization. With the impairment behind it, operating income more than doubled to $1,057.9 million and diluted EPS rose to $7.13. Net revenue grew 10.1%, helped by rising options volumes as 0DTE trading took off.
2024: steady but slower. Net revenue grew 8.0% to $2,072.4 million, and adjusted EPS reached $8.61. Diluted EPS barely moved ($7.21), weighed down by restructuring and other one-off items.
2025: breakout. This is where the index options story showed up in earnings. Net revenue rose 17.2% to a record $2,429.1 million, diluted EPS jumped 45% to $10.42, and adjusted EPS rose 24% to $10.67. SPX volume grew 25%. Q4 2025 alone produced net revenue of $671.1 million (+28%).
2026: acceleration. H1 2026 net revenue grew 26.7% to $1,460.5 million and operating income rose 42% to $981.6 million. Q2 2026 set a quarterly record for net revenue: net revenue $731.6 million (+25%), operating income $476.0 million (+40%), net income $351.8 million (+50%), adjusted EPS $3.56 (+45%). The Derivatives business grew net revenue 30% on another record quarter of index options volume.
Key Operating Metrics
Metric Q2 2026 YoY Index options ADV 6.2M contracts +32% Total options ADV 21.9M contracts +26% Total options RPC $0.317 +6% Multi-listed options market share 30.0% — U.S. equities on-exchange market share 9.4% — European equities ADNV €15.5B +13% Data Vantage revenue $181.6M +15% Adjusted operating margin 70.4% vs. 63.7%
Q3 2026 data points to another solid quarter, though growth may slow from Q2’s pace. SPX ADV of 4.9 million was the second-best quarter on record, and preliminary total options RPC slipped to $0.307 from $0.317 in Q2, partly reflecting mix. Cboe reports Q3 results before the market opens on October 30, 2026.
Balance Sheet and Cash Flow
As of June 30, 2026, Cboe held $2,276.2 million in cash and equivalents against $1,443.8 million of total debt, a net cash position of about $832 million. Morgan Stanley puts net cash at $826 million. Debt-to-equity is a modest 0.28 and ROE is 26.19% (Finviz).
Cash generation is strong. Operating cash flow was $1,752.6 million in 2025, against capital expenditures of $71.0 million. That implies free cash flow of roughly $1.68 billion, or about $16 per share. Exchange cash flows can include timing effects from regulatory fees and clearing balances, so we treat this as an upper-bound estimate. Capex guidance for 2026 was raised to $98–108 million from $73–83 million, which is still small relative to cash flow.
Capital return has favored dividends. Cboe repurchased only $66.7 million of stock in 2025 and $32.6 million in Q2 2026 (about 127,000 shares at an average of $256.61), well below what its cash flow could support. With the license secured and net cash growing, we see room for larger buybacks, a possible catalyst for 2027.
Margin Expansion Story
Cboe’s margin story is simple: fixed costs and accelerating volume. Management raised its 2026 revenue growth target twice (from “mid single-digit” in February to “mid to high teens” by July) while lowering expense guidance. If 2026 organic growth lands in the mid-to-high teens and expenses stay at $838–853 million, we estimate the full-year adjusted operating margin could land in the high-60s percent. The main question for 2027 is whether higher royalties, which sit in cost of revenue and so reduce net revenue directly, slow this expansion. Cboe will give specific 2027 guidance in February 2027.
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5. Valuation
Method: Forward P/E with Scenario Analysis
For a highly profitable, asset-light exchange with steady earnings, forward P/E is the most appropriate primary method. Cboe’s earnings are positive and growing, so the P/E is meaningful. We cross-check with a free cash flow yield.
Inputs (Finviz real-time data):
– Current price: $304.16
– EPS (TTM): $12.84 → P/E 23.69x
– EPS next year (consensus): $15.11 → Forward P/E 20.13x
– Shares outstanding: 104.55 million
– Market cap: $31.76 billion
– Analyst consensus target: $320.33 (+5.3%)
Choosing the multiple. Morgan Stanley notes that Cboe’s three-year average P/E is 22.0x. Peers trade at 17.58x (ICE) to 21.60x (CME) forward earnings. In June, at the height of the perpetual futures scare, Zacks put Cboe’s forward P/E at 18.69x. Our view: the license renewal justifies a move back toward the historical average, but the perpetual futures debate and undisclosed royalty terms argue for a small discount to it. We use 21x for the base case.
Base Case — $317 (+4.3%)
– EPS next year: $15.11 (consensus, unchanged)
– Multiple: 21.0x
– Fair value: $15.11 × 21.0 = $317.31
– Upside: $317.31 ÷ $304.16 − 1 = +4.3%
Assumptions: 2027 royalty reset is offset by SPX pricing, as management guides; index options volume grows at a high-single-digit rate; perpetual futures stay confined to crypto.
Bull Case — $375 (+23.3%)
– EPS next year: $16.30 (about 8% above consensus): SPX price increases more than offset royalties, 0DTE volume keeps compounding, and new products (KPI-linked contracts, tokenized options) start contributing
– Multiple: 23.0x (slightly above the three-year average as the disruption fear fades)
– Fair value: $16.30 × 23.0 = $374.90
– Upside: +23.3%
Bear Case — $238 (−21.8%)
– EPS next year: $14.00 (about 7% below consensus): royalty cost rises more than pricing can recover, trading volumes normalize from 2026’s high-volatility levels, and equities volumes keep falling
– Multiple: 17.0x (below the June trough, as perpetual futures expand toward equity indices)
– Fair value: $14.00 × 17.0 = $238.00
– Downside: −21.8%
Scenario EPS Next Year P/E Fair Value vs. $304.16 Probability Bull $16.30 23.0x $374.90 +23.3% 25% Base $15.11 21.0x $317.31 +4.3% 50% Bear $14.00 17.0x $238.00 −21.8% 25% Probability-weighted $311.88 +2.5%
Cross-Check: Free Cash Flow Yield
Using 2025 free cash flow of about $1.68 billion (operating cash flow minus capex), Cboe trades at an FCF yield of about 5.3% on its $31.76 billion market cap. Even allowing for timing effects in exchange cash flows, that is a reasonable but not deeply discounted yield for a business growing earnings at double-digit rates. It supports a fair value near the current price, not far above it.
Comparison to Consensus
Our base case of $317 is close to the Finviz consensus target of $320.33 and well below Morgan Stanley’s $358. Morgan Stanley forecasts a 5.8% revenue CAGR and about 10.2% annual EPS growth through 2028. It sees the stock at 17.6x projected 2027 earnings, a 4.4-turn discount to its 22.0x three-year average, and assigns meaningful value to ‘unpriced’ upside from KPI prediction markets. That growth path is not far from our own cautious view, so the gap with Morgan Stanley comes mainly from two things other than EPS growth: the multiple and KPI optionality. Morgan Stanley expects a re-rating toward roughly 22x, while we use 21x because royalty economics are undisclosed and 2026 is a tough comparison after an exceptionally active trading year. We also do not include KPI prediction markets in our base case. We agree with Morgan Stanley’s central point that the Cboe S&P 500 options license extension removes a structural overhang. We disagree on how much of that is still unpriced after the stock’s roughly 34% recovery from its June low.
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6. Risk Factors
Risk 1: Royalty Economics After 2027
A key unknown in the Cboe S&P 500 options license extension is price. Neither Cboe nor S&P Dow Jones Indices has disclosed the new royalty terms, which start on January 1, 2027. S&P DJI negotiated from strength: it owns the index, and Cboe had no realistic alternative for its most profitable product. Cboe says the impact on 2027 net revenue growth will be “de minimis” after accounting for volume growth and pricing, but that statement assumes Cboe can successfully raise SPX fees and that volumes keep growing. If volumes fall in a calmer market at the same time royalties rise, the net effect could be clearly negative. Because royalties sit in cost of revenue, they reduce net revenue directly and fall almost entirely to the bottom line. Investors will get clarity only when Cboe issues 2027 guidance in February 2027. Until then, any sign that the royalty step-up is larger than expected, for example through unusually large SPX fee increases, would be a warning signal.
Risk 2: Perpetual Futures and Retail Product Substitution
The CFTC’s approval of perpetual crypto futures in late May 2026 triggered a sharp drawdown in Cboe shares: 9% in a day and 28.4% in a month. The concern is that perpetuals, which offer leveraged exposure with no expiry, could eventually extend to equity indices and compete for the same short-term retail traders who now drive 0DTE SPX volume. So far the data does not show substitution, since SPX 0DTE volume set records in Q3 2026. But regulatory change can move faster than expected, and the brokerages that route retail flow also have commercial incentives to promote whichever products earn them the most. If a major brokerage launched equity-index perpetuals with an aggressive marketing push, Cboe’s multiple would likely compress quickly, even before any measurable impact on volume. This is mainly a valuation risk in the near term and an earnings risk over the long term.
Risk 3: Volume Cyclicality and Tough Comparisons
Cboe’s revenue depends on trading activity, and trading activity depends on volatility. 2025 and 2026 have been unusually active periods, and Q2 2026 results reflected record index options volumes. Some cooling is already visible: Q3 2026 SPX ADV of 4.9 million was the second-best quarter, not a record, and preliminary total options RPC dipped to $0.307 from $0.317. September U.S. on-exchange equities volume fell 14.7% YoY and futures ADV fell 7.6%. If markets calm down in 2027, Cboe faces difficult year-over-year comparisons just as the royalty reset takes effect. A pairing of slower volume and higher costs is the most likely path to our bear case. Cboe’s data business and pricing power soften this cyclicality but do not remove it, since options still produce about 65% of net revenue.
Risk 4 (Additional): Regulatory Scrutiny of 0DTE Options
0DTE options now account for roughly 65% of SPX volume on our calculation. That concentration is a strength while demand grows, but it also makes Cboe exposed to regulatory action. Regulators and academics have debated whether 0DTE trading increases intraday volatility or harms retail investors. Stricter options-approval standards, higher margin requirements for retail accounts, or position limits on same-day expiries would directly cut volume in Cboe’s fastest-growing product.
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7. Conclusion & Exit Plan
Investment Rating: Hold (accumulate on pullbacks)
The Cboe S&P 500 options license extension is a genuine positive. It secures Cboe’s most valuable asset through 2051 and removes a risk that has hung over the stock for years. The underlying business is also excellent: a wide moat in index options, a 70% adjusted operating margin, 26% ROE, net cash, a growing dividend, and 2026 revenue growth running well ahead of management’s original plan.
But a good company is not always a good stock at every price. At $304.16 and 20.1x forward earnings, our base-case fair value of $317 offers only about 4% upside, and our probability-weighted value of $312 offers less. The royalty terms are undisclosed, the perpetual futures debate is unresolved, and 2027 comparisons look tough. We therefore rate Cboe Hold today and would become buyers on weakness.
Entry price range: $270–$285. That range equals about 17.9x–18.9x consensus EPS next year, close to the trough multiple of the June sell-off, when investors were pricing in serious disruption. Buying there gives a margin of safety of about 10%–15% against our base case and a better risk/reward against the bull case.
Exit conditions:
– Target achieved: Take partial profits at $317 (base case) and sell the rest near $375 (bull case) if the bull drivers play out.
– Fundamental break: Sell if (1) Cboe’s February 2027 guidance implies net revenue decline due to the royalty reset, (2) SPX ADV falls below 3.9 million (the 2025 average) for two consecutive quarters, or (3) a major U.S. brokerage launches equity-index perpetual futures and SPX 0DTE volume shows measurable decline.
– Time-based: Reassess after Q3 2026 earnings on October 30, 2026, and again after the February 2027 guidance release.
Key catalysts to watch:
1. Q3 2026 earnings (October 30, 2026): RPC trends, any update on 2026 guidance, comments on SPX pricing
2. February 2027: first 2027 organic net revenue guidance, which shows the royalty impact
3. Monthly volume reports: SPX and 0DTE ADV trends
4. Any CFTC or SEC action extending perpetual futures to equity indices
5. Capital allocation: whether Cboe increases buybacks now that the license is secured
Item Detail Company Cboe Global Markets (CBOE) Current Price $304.16 Target Price $317 (base case) Upside +4.3% Rating Hold (accumulate at $270–$285) Key Thesis Exclusive SPX license secured to 2051 underpins wide-moat, 70%-margin index options franchise Main Risk Undisclosed 2027 royalty reset combined with perpetual futures competition and volume normalization
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Disclaimer
This content is general investment information provided to an indefinite/unspecified audience by a quasi-investment advisory business registered under Korea’s Financial Investment Services and Capital Markets Act, and is not personalized 1:1 investment advice tailored to any individual investor. This analysis is for informational purposes only and is not a solicitation to invest. All investment decisions and their consequences rest solely with the investor. The estimates and assumptions in this report are as of the writing date (2026-10-10) and may not materialize depending on market conditions and geopolitical variables. Financial data used reflects sources such as company filings and analyst consensus, and the scenarios and price targets represent the author’s conservative assessment. All investments carry the risk of principal loss, and past performance or analytical track record does not guarantee future results. As of the writing date, the author does not hold a position in this stock. The author’s holdings and positions may change without prior notice depending on market conditions.
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참고 자료
- Cboe rallies after Morgan Stanley double upgrade points to durable options growth (Investing.com)
- Cboe and S&P Dow Jones Indices Sign 25-Year Extension of Exclusive Licensing Agreement, Through 2051 (Cboe IR)
- Cboe Provides Additional Details Relating to Anticipated Financial Impact (StockTitan)
- Cboe Global Markets Reports Results for Second Quarter 2026 (SEC 8-K)
- Cboe Global Markets Reports Results for Fourth Quarter 2025 and Full Year (SEC 8-K)
- Cboe Global Markets Reports Trading Volume for September 2026 (StockTitan)
- Cboe falls 9% as perpetual futures approval weighs on exchanges (Investing.com)
- CBOE Stock Plunges 28.4% in a Month: Time to Buy the Dip? (Zacks via Yahoo Finance)
- Cboe Global Markets Declares Increased Third-Quarter 2026 Dividend (Cboe IR)