Cboe (CBOE) Q2 FY26 earnings call: guidance and Q&A

How do options compare to perpetual futures, especially for retail, and where is the overlap? What's the mix of sophisticated vs. less sophisticated retail trading?

Options offer defined risk and convexity, unlike linear perpetual futures which have unbounded downside. Perps emerged from crypto for leveraged exposure without expiration, but options serve different needs (hedging, income, volatility management). Over 95% of 0DTE trades are defined risk strategies (55% spreads). Cboe views perps as complementary, not a direct substitute, and may expand continuous futures where demand exists. Retail demand is broad, with a much larger ecosystem than futures.

“Perps offer no expiration date. So you can hold an underlying position indefinitely. This really is contrary to 0DTE contracts that expire the day you trade them. Perps do provide leverage, but it's in the form of linear exposure so that the market moves, whether it's for or more importantly, against your position gains and losses move proportionally and the amount of leverage offer really just dictates how quickly your gains and losses move. And so options, as we've mentioned, offer that complexity and really that defined risk exposure.”

asked by Ben Budish · answered by Robert Hocking

What's the demand for company KPI event contracts, who are the end-users, and is any revenue baked into H2 guidance?

Cboe views event/prediction markets as an exciting extension. XSP binary options launched June 15, showing encouraging engagement with 3 market makers and Schwab as an anchor tenant. Company-specific KPI contracts allow more granular trading (e.g., NVIDIA's data center revenue). Initial adoption expected from retail, then institutions as historical data grows. No notable revenue from these new products is incorporated into H2 guidance.

“What the company-specific KPI contracts provide is really the ability to go even more granular to trade and manage the individual components that drive the company's stock value. So for example, I think in NVEDIA's data center revenue, I think Microsoft cloud-based revenue, today's markets consistently referenced predictions.”

asked by Patrick Moley · answered by Robert Hocking

Confidence level for SEC approval by Q3, involvement of CFTC, and pricing strategy (proprietary vs. multi-listed options).

Cboe has been working closely with SEC staff; process is going well. The filing is open for public comment until next Wednesday. CFTC involvement is likely through cooperation with SEC. Pricing will be competitive, more aligned with other event prediction market contracts, considering the smaller notional value compared to SPX options.

“On the pricing front, we are still in that exercise right now, but I think you can think of these more closely aligned to other event prediction market contracts on the market. We think we can be very competitive. The reason I say that is the notional value of SPX contract is so big with the 100 multiplier in the index size compared to these event contracts and specifically the KPI ones where you're looking at effectively $1 yes or no contract.”

asked by Brian Bedell · answered by Craig Donohue

How would a shift to semiannual reporting affect options usage, retail engagement, liquidity, and price discovery?

It's hard to speculate. While known event regularity would change, daily market movements and announcements would still drive options trading. 0DTE options are used daily for various market dynamics. Semiannual reporting might be partially hedged by event/prediction markets. Cboe is monitoring issuer sentiment, which suggests semiannual reporting is unlikely to replace quarterly.

“Arguably, options and 0DTE are being used daily to trade around different movements in the market. So even though we kind of event regularity or the known events on the landscape with change in frequency, I still think there's enough dynamics of day-to-day movements, day-to-day announcements, day-to-day evolutions of the market space, where you'll still see people positioning using options around those.”

asked by Michael Cyprys · answered by Craig Donohue

What products can be innovated with new clearing capabilities, and are there inorganic investment opportunities for clearing?

Cboe's clearing expansion in Europe focuses on securities finance transactions. In the U.S., it's an enabler for product and market innovation, allowing quicker introduction of products like KPIs. This is complementary to OCC, allowing Cboe to move faster and address different risk profiles. The company is open to inorganic investments in clearing, including tokenization and rails infrastructure, to improve innovation speed.

“In the U.S. segment. We're really looking at clearing as an enabler for product innovation, market innovation and the ability to bring products to market at a time when there's a lot of change in the industry and a lot of opportunity, we think.”

asked by Ashish Sabadra · answered by Craig Donohue

Update on global expansion of customer base for SPX/0DTE, and how new product innovation affects attention from intermediaries and end investors.

Strong international demand from APAC and EMEA for core products (SPX, VIX) due to liquidity, with successful expansion in Korea. The repeal of the Pattern Day Trader rule significantly boosted retail engagement in SPX, XSP, and multi-list options, with higher order counts and smaller average order sizes, indicating broader participation. New product innovation is driven by inbound demand from platforms like Robinhood and Webull, which see massive client interest.

“across the top 9 retail brokers, average daily volume increased following that rule change with SPX up almost 3.5%, excess PADV was up over 36% and multi-list options ADV was up almost 4%.”

asked by Alex Kramm · answered by Craig Donohue

Are new event/KPI products large separate markets or feeders to existing core, and how does this relate to retail/institutional customers?

It's a combination. These new products expand Cboe's toolkit, creating interconnectedness across the valuation chain (e.g., KPI to EPS to stock price to index). Retail investors may focus on individual components, while institutions view the complete value chain for risk management. More interconnected products allow for better risk spreading and increased liquidity provision across the platform.

“When you think of SPX and VIX, this is an expansion of that. As I talked about the value chain for company-specific KPIs, you can see how Navidea's data center sales will feed EPS and how EPS will feed their stock price, how the stock price will feed the sector price and so forth.”

asked by Simon Clinch · answered by Craig Donohue

What are the drivers of Data Vantage growth in FY26 and its sustainability into next year?

Data Vantage revenue was $178 million, up 15% YoY. Two-thirds of growth came from higher access-related revenue, mainly increased connectivity demand to options exchanges (multi-list options ADV up 24%, SPX options ADV up 40%). The remaining one-third was from market data, with strong demand for U.S. and European proprietary data sets, and 50% of sales from international clients. Good momentum is expected to continue.

“About 2/3 of that growth was driven by higher access-related revenue and the majority of that access-related revenue really came from increased connectivity and demand for increased connectivity to our options exchanges, right?”

asked by Daniel Fannon · answered by Craig Donohue