Cboe Global Markets -- How the Business Works
Cboe Global Markets operates financial exchanges across five segments -- Options, North
American Equities, Futures, Europe and Asia Pacific, and Global FX -- plus the cross-segment
Cboe DataVantage market-data business. The economic engine is narrow but extraordinarily
deep: a proprietary SPX/VIX/Mini-SPX/Russell 2000 index-options franchise, licensed
near-exclusively from S&P Dow Jones Indices, that runs at ~98% market share and generates
roughly 47% of total net revenue. FY2025 net revenue totaled $2,429.1M (+17.2% YoY) with a
67.7% Adjusted EBITDA margin and just ~$71M of annual capex.
Adj. EBITDA Margin
74.7%
Q1'26, +680bps YoY
Annual CapEx
~$71M
~2.9% of net revenue
Index Options Share
~98%
S&P DJI exclusive license
How Cboe makes money -- FY2025 net revenue by segment
FY2025 Net Revenue Breakdown -- $2,429.1M Total
Options
$1,531.1M (63.0%) -- includes the ~98%-share index-options monopoly
North American Equities
$407.2M (16.8%)
Europe and Asia Pacific
$273.5M (11.3%)
Futures
$126.2M (5.2%)
Global FX
$91.1M (3.8%)
The Options segment blends two very different businesses: a ~98%-share index-options
monopoly (SPX/VIX/Mini-SPX/RUT, 47.1% of company revenue alone) and a fragmenting,
price-taking multi-listed options business (9.2% of company revenue, Cboe share falling
as MIAX grows). Cboe DataVantage market data revenue is embedded across all five segments,
not broken out separately.
Segment net revenue from Cboe FY2025 10-K / Daloopa segment data. Source: Daloopa.
Inside Options: a monopoly bundled with a price war
Options Segment Split -- % of Total Company Net Revenue, FY2025
Index options (SPX/VIX/RUT)
47.1% of company -- $1,143.7M -- ~98% share (near-exclusive license)
Multi-listed options
9.2% of company -- $222.8M -- ~22-25% share, falling
The index-options sub-segment sets price -- rate per contract (RPC) was +19% YoY in
Q1 2026, real pricing power. The multi-listed options sub-segment is a price-taker: Cboe's
share fell from 25.0% (Q1'25) to 22.9% (Q4'25) as MIAX grew, in an explicit fee/rebate
competitive war against Nasdaq (~29% share) and ~20 exchanges overall.
Source: Cboe dim_2 thematic-exposure workspace, Daloopa segment data (index options $1,143.7M, multi-listed $222.8M).
Business model flow -- from license to revenue
Step 1 -- Exclusive Index License
S&P Dow Jones Indices licenses SPX/VIX/Mini-SPX/RUT to Cboe near-exclusively
Cboe is the only venue that can list options on the S&P 500 (SPX), the VIX
volatility index, Mini-SPX, and Russell 2000 index options -- a license reportedly
running to roughly 2032. No competitor can replicate this product; a customer
cannot substitute it within 12 months, or arguably within several years.
▼
Step 2 -- OCC Clearing Lock-In
Every trade clears through OCC's shared risk pool
SPX, single-name 0DTE, MAG10, and the emerging binary/event contracts are all
designed to land in the same OCC portfolio-margining risk pool -- a lock-in
mechanism that deepens rather than dilutes the moat as Cboe adds new products on
top of the existing franchise.
▼
Step 3 -- Distribution Network
34 broker platforms, 20 market-making groups, 11 floor-broker groups
A genuinely diversified buyer base -- retail brokers, international brokers
(Korea, Taiwan, broader APAC), institutional volatility hedgers, and market
makers -- trades through Cboe's 43-year-old trading floor, which management says
"cannot be replicated electronically."
▼
Step 4 -- Monetization
Revenue from rate-per-contract (RPC) fees + DataVantage subscriptions
Cboe earns a fee on every option contract traded and cleared -- RPC in the index
options franchise rose 19% YoY in Q1 2026 on real pricing power, layered on top of
record SPX volumes (0DTE penetration 61% of SPX volume, up from 51% a year prior).
Cboe DataVantage (market data licensing across all five segments) grew net revenue
+19% YoY in Q1 2026, a high-quality recurring layer on top of the volume-driven core.
Why the moat holds -- and where it doesn't
Exclusive Index License
S&P DJI licenses SPX/VIX/Mini-SPX/RUT index options to Cboe near-exclusively,
reportedly through ~2032. No rival exchange can list a competing product on these
benchmarks today -- a legal monopoly, not merely a market-share lead.
OCC Portfolio-Margining Lock-In
New Cboe products (single-name 0DTE, MAG10, event contracts) are designed to clear in
the same OCC risk pool as SPX -- each new listing reinforces the same collateral
efficiency rather than fragmenting liquidity across venues.
The Other ~53% Is Replaceable
Multi-listed options, NA equities, Europe cash equities, and Global FX are fragmented,
price-taking businesses -- brokers already route the same order across 15-20+
competing venues in real time, and Cboe actively trades share for fee capture quarter
to quarter in these lines.
Capital-light economics
FY2025 FCF
$1,681.6M
69.2% FCF margin, +61.7% YoY
Diluted Shares
105.1M
Down every year for 5 years
Net Debt / EBITDA
-0.31x
Net-cash balance sheet
Cboe's exchanges and matching engines are software platforms requiring minimal physical
infrastructure. Annual capex of ~$71M on $2,429.1M net revenue (~2.9%) lets most incremental
revenue convert to free cash flow: FY2021-FY2025 FCF grew every year, nearly tripling from
$545.8M to $1,681.6M as FCF margin expanded from ~37% to ~69%. Total debt has been flat at
$1,450M for three straight fiscal years while net revenue grew +26.7% cumulatively over the
same span -- debt is not growing faster than the business, and diluted share count has fallen
every year for five years (107.2M to 105.1M) via buybacks, funded from a net-cash position.
Data sourced from Daloopa, Cboe 10-K/10-Q filings, and earnings transcripts. Full detail: tickers/CBOE/data/review_workspaces/2026-07-24/final_score.md.