Cboe's volume is growing. What reaches earnings?
By @engtmk · Research as of 12 October 2026
My 14 September Cboe research asked whether trading activity becomes durable earnings. The latest evidence sharpens that question: which contracts generate the activity, how much revenue does each bring, and what remains after costs?
This expands today’s eToro post. The business evidence is encouraging; the earnings and valuation conclusions remain conditional. The useful distinction is between a busier exchange and a better investment at the price paid.
The evidence, with the periods kept separate
Cboe’s 5 October release shows September year-over-year daily activity: index options +22.3%, multi-listed +0.7%, futures −7.6%, FX dollar value +26.6%. Matched-share activity fell 14.7% in U.S. on-exchange equities and 14.2% in Canada.
| Average revenue per contract, USD | Three months through August (June–August) | Preliminary Q3 (July–September) | Calculated change, USD |
|---|---|---|---|
| Index options | 0.955 | 0.952 | −0.003 |
| Multi-listed options | 0.054 | 0.052 | −0.002 |
| Total options | 0.304 | 0.307 | +0.003 |
| Futures | 1.700 | 1.712 | +0.012 |
RPC is net transaction fees per contract, not profit. Historical figures lag one month; Q3 estimates may change. Fees, discounts and mix affect averages.
The overlapping windows replace June with September. Multiplying monthly activity by quarterly RPC does not establish monthly revenue.
Why the blend deserves more attention than the headline
Calculated RPC changes: index −0.31%, multi-listed −3.70%, blended options +0.99%. These are percentage changes, not margin percentage points.
A rising blend while both category averages fall is consistent with a greater contribution from the higher-revenue category. It does not mean each product became more profitable. Nor is this a fully reconciled mix bridge: that requires aligned contract weights, definitions and unrounded data for both windows. The published rounded values are useful signals, not a licence to invent precision.
Consider an illustrative exchange with two products earning 1.00 and 0.10 per contract. At equal contract weights, the average is 0.55. If their respective averages fall to 0.95 and 0.09 but the first product rises to 60% of contracts, the blend becomes 0.606. The aggregate improves despite lower revenue per unit in both products.
That is a hypothetical demonstration, not a reconstruction of Cboe’s results. It shows why an investor should ask both “what happened within the businesses?” and “how did their weights change?” A stronger aggregate can coexist with pressure beneath it.
Breadth is useful; unlike units cannot be added
The activity snapshot supports a more balanced reading than “everything is booming” or “only options matter.” It contains both expansion and contraction. Different businesses can contribute to resilience without moving together.
The investment test is their contribution to consolidated economics. A percentage increase in currency traded cannot be added to a percentage increase in options contracts. Nor can their daily volumes be ranked as if a dollar of currency turnover and a derivatives contract were interchangeable units. Each needs its own revenue conversion and cost analysis.
The highest RPC in a table also need not identify the fastest-growing business. A high fee yield does not rescue a declining activity base automatically; conversely, lower-yield activity may matter if its scale is large enough. The proper comparison is aligned-period net revenue and profit contribution, rather than the most impressive number in either column.
The licence extends visibility, not certainty about costs
The 29 September licensing update extends Cboe’s exclusive S&P DJI agreement through 2051. Existing royalty terms are unchanged for 2026; the reset begins in 2027.
Management expects a minimal effect on 2027 net-revenue growth after considering volume growth, pricing opportunities and execution. That is a conditional management estimate, not evidence that incremental royalties are zero. More specific 2027 organic total net-revenue guidance is due in February with Q4 earnings.
The analytical benefit of longer rights is greater visibility over access to important products. But longer duration and attractive economics are separate questions. A durable franchise can still face a more expensive input, and the valuation may already reward its durability.
Two questions should remain distinct: what would growth look like before the reset, and what offsets are needed after it? If stronger activity merely absorbs extra costs, the business can grow while delivering less incremental value than the headline suggests. If pricing and sustained demand more than compensate, the reset may be manageable. Neither outcome follows solely from the contract’s length.
What would turn activity into an earnings conclusion?
The next bridge needs three steps. First, compare reported net transaction revenue with the corresponding prior-year quarter, explaining product mix and fee capture. Second, examine expenses and recurring operating profit. Third, consider cash generation and any exceptional items before drawing conclusions about per-share value.
This is the same distinction explored in Friday’s Costco research: strong operating activity narrows one uncertainty without settling the cost question. The companies have different economics, but the discipline is transferable.
| Scenario to test | Supporting evidence to look for | What would challenge it |
|---|---|---|
| Activity converts well | Sustained demand, favourable revenue conversion and recurring profit growth | Rising activity accompanied by weaker margins or cash conversion |
| Costs absorb the benefit | Revenue improves but expenses or royalties consume much of the increment | Controlled costs and stronger profit conversion |
| Activity normalises | Later demand weakens enough to outweigh mix or pricing benefits | Broad persistence across subsequent comparable periods |
These are analytical scenarios, not forecasts or assigned probabilities. The strongest optimistic argument is that favourable product economics and sustained demand could reinforce each other. The strongest caution is that an activity report does not contain the complete earnings bridge needed to prove that outcome.
The next decision points
Cboe has scheduled Q3 results for 30 October, before the U.S. market opens, followed by a call at 8:30 a.m. Eastern Time. That is the next opportunity to compare estimates with actual results, examine the expense bridge and hear management’s explanation of the business mix.
February’s promised guidance is a separate forward-looking test. October’s results cannot by themselves settle the full effect of next year’s licensing economics. Keep the actual-results question separate from the future-offset assumptions.
Finally, business quality does not remove valuation risk. As the earnings-and-multiples framework explains, growing earnings can coexist with a disappointing stock return if expectations were higher or the multiple falls. No current share price, consensus valuation or portfolio weight is asserted here. Cboe should not be treated as an automatic portfolio hedge simply because its business serves trading and risk management.
My assessment: the new evidence improves the activity case and makes mix more important. Conviction about earnings still needs the cost bridge; conviction about value still needs the price.
Which matters more next: continued volume growth or stronger profit conversion?
Sources and scope
Checked 12 October 2026 against the three linked Cboe primary releases. Release dates, activity periods and preliminary estimates are distinguished above. Calculations and hypothetical examples are labelled; scenarios are analysis rather than company guidance. The cover is a conceptual illustration, not a scaled financial chart or a statement of reported earnings.
My portfolio and views, not investment advice.
@engtmk engtmk.com