• 3 minutes Nucelar Deal Is Dead? Iran Distances Itself Further From ND, Alarming Russia And France
  • 5 minutes Don Jr. Tweets name Ukraine Whistleblower, Eric Ciaramella. Worked for CIA during Obama Administration, Hold over to Trump National Security Counsel under Gen McCallister, more . . . .
  • 9 minutes Shale pioneer Chesepeak will file bankruptcy soon. FINALLY ! The consolidation begins
  • 12 minutes China's Blueprint For Global Power
  • 3 hours EU has already lost the Trump vs. EU Trade War
  • 2 days Science: Only correct if it fits the popular narrative
  • 11 mins Impeachment S**te
  • 2 days Crazy Stories From Round The World
  • 5 hours Pope Proposes New Sin: Thou Shalt Not Destroy The Harmony Of The Environment
  • 10 hours Everything You Need To Know About Trump
  • 2 hours 55.00 WTI
  • 2 hours Visualizing Pennsylvania Oil & Gas Production (Through September 2019)
  • 1 day IEA predicts oil demand will grow annually at 1 million barrels a day for the next 5 years
  • 4 hours Water, Trump, and Israel’s National Security
  • 2 days Atty General Barr likely subpeona so called whistleblower and "leaker" Eric Ciaramella
  • 2 days Iran Burning: Shock Gas Price Hike Triggers Violent Protests After Subsidy Cuts
  • 1 day ‘If it saves a life’: Power cut to 1.5 million Californians
  • 10 hours Last I Checked
Alt Text

Chinese Rare Earth Exports Tumble As Trade War Accelerates

China, the world’s largest producer…

Alt Text

Investors Return To Plowing Money Into Commodities

Commodities are trending once again…

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