Cboe's Index Options Benefit From Increasing Retail Interest and Volatile Markets in 2025

Under new CEO Craig Donohue, Cboe has stated its intent to optimize its capital allocation and spending decisions. We like this shift for the company, as Cboe’s unfocussed investment strategy led to excessive operating expense growth during 2020-24, offsetting some of the benefit of the firm's impressive option volume and data revenue growth. There are already tangible signs as a result of the change in strategy, with Cboe closing its Japanese equity exchange in 2025. This followed on the firm exiting cash cryptocurrency trading in 2024. With a strong focus on cost efficiency, we see room for margin expansion as the firm benefits from a mostly fixed cost base and strong revenue growth.