Key Highlights

● Shares were indicated at $322.50, up 2.63%, in Friday's 8:23 a.m. ET pre-market table.

● Net Revenue rose 18% to $712.2 million and adjusted EPS climbed 36% to $3.63.

● Options net revenue rose 23% to $469.5 million, about two-thirds of the total.

● Cboe lowered its adjusted Operating Expense forecast to $830 million to $845 million.

Cboe Global Markets (CBOE:CBOE) is trading higher before the bell after reporting a quarter powered by the Options boom. The exchange operator was indicated at $322.50, up 2.63%, in a pre-market table as of 8:23 a.m. ET Friday, after releasing third-quarter results at 7:30 a.m. ET.

An automated note attached to the move referenced a beat and higher guidance, but it also cited "2024," so that summary looks stale. The figures here come from Cboe's own release.

Options do the heavy lifting

Net revenue rose 18% from a year earlier to $712.2 million, according to Cboe's release. Adjusted EPS climbed 36% to $3.63, and GAAP EPS reached a record $4.08.

Options remain the core of the business. Options net revenue rose 23% to $469.5 million, about two-thirds of the company total. North American Equities grew 10% to $113.5 million, and Data Vantage, Cboe's market data and access unit, posted record revenue, up 13%.

Cboe also raised its 2026 outlook. It now expects organic net revenue growth in the "high teens" and lowered its forecast for adjusted operating expenses to $830 million to $845 million. Higher revenue with lower spending is the combination that usually widens margins.

CEO Craig Donohue said: "Our strong momentum continued in the third quarter as we took important steps to advance our growth strategy." CFO Jill Griebenow added: "Cboe posted strong third quarter results, delivering net revenue growth of 18 percent year over year."

Why Volatility is good business

Cboe operates the largest U.S. options exchanges and runs the Cboe Volatility Index, or VIX, the market's best-known fear gauge. Its Business tends to benefit when markets are active and investors hedge more, and this autumn has given traders plenty of reasons to do both.

The Federal Reserve raised rates in September and held this week with two dissenters calling for another hike. The 10-year Treasury Yield topped 5.30% earlier in October, its highest since 2002, according to market data. Oil has surged on Strait of Hormuz tensions, and Big Tech Earnings are swinging stocks sharply. Alphabet (NASDAQ:GOOGL) posted its worst day on record Thursday, and Nasdaq-100 futures were down about 2.5% early Friday after Amazon (NASDAQ:AMZN) and Intel (NASDAQ:INTC). The VIX closed Thursday at 17.20.

That kind of environment tends to support options volumes, which explains why an exchange stock can rise on a day when the broader market is set to open lower. Cboe is a member of the S&P 500, and its shares trade on its own Cboe BZX exchange rather than on the NYSE or Nasdaq.

Risks and what to watch next

Exchange revenue depends on trading activity, so a calm market could slow Volume growth. Competition from other options venues and pressure on fees are lasting risks, and regulatory changes to market structure could affect revenue from trading and data. Investors will also want evidence that the "important steps" Donohue referenced in the growth strategy translate into revenue beyond the options business.

The positive case is that Cboe is growing revenue in the high teens while cutting its cost forecast, a mix that supports profit margins in any market.

At the open, watch whether Cboe holds its gain as volatility picks up, and whether rival exchange operators trade in sympathy. Monthly volume reports from exchanges in early November will show whether October's activity carried into the fourth quarter. The next macro catalysts that could drive hedging include Tuesday's midterm elections, next Friday's jobs report and the Fed's December meeting.