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The Chicago Board Options Exchange (CBOE) announced that its unaudited pre-tax profit for the three-month period ending September 30, 2007 was $41.2 million, compared with pre-tax profit of $16.3 million for the same period a year ago. Net income for the third quarter was $22.7 million, compared with $9.1 million for the third quarter in 2006. CBOE's average daily volume for the third quarter was 4.1 million contracts, compared with 2.5 million contracts during the same three-month period of 2006.
Year-to-date, CBOE is reporting a pre-tax profit of $103.7 million on average daily volume of 3.7 million contracts per day. During the same period last year, CBOE reported a pre-tax profit of $48.3 million on average daily volume of 2.6 million contracts per day.
"We are very pleased with our year-to-date financial results for 2007, which show a 115% increase in pre-tax profit compared to the same period last year, and a 38% increase in volume," said CBOE Chairman and CEO William J. Brodsky. "CBOE continues to grow its business through new product development. VIX options, introduced by CBOE in 2006, have significantly increased volume in 2007, and this quarter CBOE introduced two new volatility products, the CBOE Nasdaq-100 Volatility Index (VXN) and the CBOE Russell 2000 Volatility Index (RVX)."
During the third quarter of 2007, CBOE recorded total revenues of $96.8 million, compared with $63.4 million for the same quarter last year. The $33.4 million increase (53% over third quarter 2006), reflects higher transaction fees generated by strong growth in contracts traded.
Year-to-date, revenues totaled $259.3 million, compared with $193.1 million for the same period in 2006. The $66.2 million increase (34% over 2006) reflects the higher trading volume in 2007 compared with 2006. Year-to-date, expenses increased 7% and net income increased 108% compared with the same nine-month period in 2006.
| Quarter | Ended | Q-3
'07 vs. Q-3 '06 |
Year-to-Date 2007 | Year-to-Date 2006 |
YTD '07 vs. YTD '06 | |
| (In millions) | 9/30/07 | 9/30/06 | % Change | Thru Sept '07 | Thru Sept '06 | % Change |
| Total Revenues | $96.8 | $63.4 | +53% | $259.3 | $193.1 | +34% |
| Total Expenses | $55.6 | $47.1 | +18% | $155.6 | $144.8 | +7% |
| Income Before Taxes | $41.2 | $16.3 | +153% | $103.7 | $48.3 | +115% |
| Net income | $22.7 | $9.1 | +150% | $59.0 | $28.3 | +108% |
Working capital (current assets minus current liabilities) increased by $27.2 million to $150.1 million during the third quarter, while cash and investments increased by $24.8 million to $156.3 million at September 30, 2007. The growth in revenues net of cash expenses and capital expenditures drove these increases.
A more detailed report is available in Information Circular IC07-163 at: http://www.cboe.org/Legal/crclInfo.aspx.
During the third quarter of 2007, CBOE made the following announcements:
- On September 27, CBOE began trading options on the CBOE Nasdaq-100 Volatility Index (VXN) and the CBOE Russell 2000 Volatility Index (RVX). These two new contracts expand the suite of volatility products offered exclusively at CBOE and the CBOE Futures Exchange (CFE). CBOE will now offer options on three of CBOE's volatility benchmarks, as VXN and RVX options will join the popular CBOE Volatility Index (VIX) options.
- On August 28, CBOE began trading Basket Credit Event Binary Options (Basket CEBOs); two based on specific industry sectors (automobile and homebuilder) and the third as a high-yield composite basket. Basket CEBOs are call options based on a basket of reference entities (the basket components).The options automatically pay out a cash amount each time a credit event is confirmed in any of the basket components during the life of the contract.
- On September 6, CBOE announced that it signed a Memorandum of Understanding (MOU) with the Taiwan Futures Exchange (TAIFEX). The MOU lays the foundation for the sharing of information for the potential development of options and other derivatives products.
- August was the busiest month in CBOE history as 105,551,741 contracts traded. Numerous exchange and individual product volume records were set during the month, including single-day, weekly and monthly trading totals.
- Volume during the third quarter of 2007 totaled 260.0 million contracts, compared with 160.1 million contracts for the third quarter of 2006, an increase of 62%. Average daily volume during the July, August and September time period was 4.1 million contracts, compared with 2.5 million contracts per day during the same period in 2006.
- For the first nine months of the year, volume at CBOE totaled 686.0 million contracts, an increase of 38% over the first nine months of 2006. In fact, the 686.0 million contracts traded through the end of September have already surpassed the 674.7 million contracts traded for all of 2006. Year-to-date average daily volume is 3.7 million contracts, and CBOE's year-to-date market share of total industry volume was 34% at the end of September.
- A CBOE membership, or seat, sold for an all-time high of $2,700,000 on August 6. A total of 19 seats were bought during the quarter.
CBOE, the largest U.S. options marketplace and the creator of listed options, is regulated by the Securities and Exchange Commission (SEC). For additional information about the CBOE and its products, visit the CBOE website at: www.cboe.com.
