• 4 minutes Will We Ever See 100$+ OIL?
  • 8 minutes Iran downs US drone. No military response . . Just Destroy their economy. Can Senator Kerry be tried for aiding enemy ?
  • 11 minutes Energy Outlook for Renewables. Pie in the sky or real?
  • 29 mins Shale Oil will it self destruct?
  • 3 hours Berkeley becomes first U.S. city to ban natural gas in new homes
  • 22 hours Excellent Choice: Germany's Von der Leyen Secures Powerful EU Executive Top Job
  • 3 hours Today in Energy
  • 3 hours Oil Rises After Iran Says It Seized Foreign Tanker In Gulf
  • 1 hour Populist, But Good: Elizabeth Warren Takes Aim at Private-Equity Funds
  • 2 hours Mnuchin Says No Change To U.S. Dollar Policy ‘As of Now’
  • 20 hours Migration From Eastern Europe Raises German Population To Record High
  • 13 hours Washington Post hit piece attacking oil, Christians and Trump
  • 1 day White House insider who predicted Iran False Flag, David Goldberg found dead in his New York apartment
  • 1 day Germany exits coal: A model for Asia?
  • 1 day Starlink Internet Courtesy of Tesla
  • 6 hours Why Natural Gas is Natural
Alt Text

Investors Return To Plowing Money Into Commodities

Commodities are trending once again…

Alt Text

As Diesel Dies, One Commodity Is Crashing

Platinum futures plunged to 14…

Alt Text

This Year, Everyone Will Love Uranium

Utilities have been buying uranium…

Mad Hedge Fund Trader

Mad Hedge Fund Trader

John Thomas, The Mad Hedge Fund Trader is one of today's most successful Hedge Fund Managers and a 40 year veteran of the financial markets.…

More Info

Premium Content

Buy Those Who Sell Shovels, Not Miners

A careful study of the history of California's 1849 gold rush shows that while almost all the miners went broke, those who provided the picks, shovels, transportation, and banking services made the real money.

Those fortunes became so vast, they live on today in names like Wells Fargo (WFC), Levi Strauss, Stanford University, and Union Pacific Railroad (UNP).

This is the logic that draws me to last week's IPO for the Chicago Board of Options Exchange (CBOE), the world's largest on both a volume and value basis.

Those 75 cent exchange fees and 49 cents clearing fees at the bottom of every trade confirm that you never pay attention to will add up to a hefty $475 million in revenues for the CBOE this year. Timing for the long awaiting issue was no doubt influenced by a 35% jump in average daily volume in April-May, compared to Q1.

The CBOE accounts for an impressive 31.4% of listed options volume.

The competing Intercontinental Exchange (ISE) has a 21.5% share, while the NASDAQ owned Philadelphia Stock Exchange has a 20% share.

CBOE is a great indirect play on volatility, as volume inevitably pops when markets fall, and volatility seems certain to plague all our live in coming years. The listed exchanges are expected to benefit greatly from the passage of the financial reform bill, which promises to drive to them existing OTC derivatives business.

Since every newly listed exchange in recent years has been bought out, CBOE offers great potential as a takeover target.

Of course, all the hype attendant to the listing brought shares to the aftermarket at a very rich 29 times, compared to 18-22 for the CME and the ICE, so I wouldn't touch it here. Better to keep it on your buy on big dips list.

By. Mad Hedge Fund Trader




Download The Free Oilprice App Today

Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play