CBOE Rises After Being Chosen for S&P MidCap 400: Chicago Mover

CBOE Holdings Inc. (CBOE) gained the most since September and bullish options trading on the stock rose to an 11-month high after Standard & Poor’s added the operator of the biggest U.S. options exchange to the S&P MidCap 400 Index.

CBOE shares climbed 6 percent, the most since Sept. 7, to $28.07 today. The Chicago-based company is up 8.6 percent in 2012. More than 11,000 calls to buy the shares changed hands, 5.3 times the four-week average daily volume and 3.2 times the number of puts to sell. February $28 calls were most-active.

The oldest U.S. options exchange will replace Temple-Inland Inc., which International Paper Co. is buying, in the S&P MidCap 400 (MID) on a date to be announced, S&P said in a statement yesterday. Funds such as the SPDR S&P MidCap 400 ETF Trust, which has $10.7 billion in market value, will have to acquire CBOE stock to keep tracking its performance.

The exchange operator reported fourth-quarter profit yesterday that exceeded analysts’ projections as higher-margin contracts accounted for a larger share of trading. Earnings excluding some items were 37 cents a share, exceeding the 35- cent average estimate of analysts surveyed by Bloomberg.

Edward Ditmire, an analyst at Macquarie Group Ltd., raised his 2012 profit forecast for CBOE by 5.1 percent to $1.84 a share today.

“Whether it’s from the index news or the earnings report, estimates are probably headed a little higher,” New York-based Ditmire said in a telephone interview today. “Most of the items they gave were constructive for the outlook.”

U.S. trading of equity derivatives linked to stocks, indexes and exchange-traded funds rose to 4.6 billion contracts last year for a ninth-straight annual record. CBOE’s two exchanges handled 27 percent of U.S. options trades last month, the largest share among the country’s equity derivatives exchange operators, according to Chicago-based OCC, which clears all trades.

Gail Osten, a CBOE spokeswoman, declined to comment on the stock’s rally.

To contact the reporters on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net; Jeff Kearns in New York at jkearns3@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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