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CBOE Completes Bullish Three-Weeks-Tight Pattern

By: Investor's Business Daily
Posted: 5/31/2013 5:39:00 PM
Referenced Stocks: CBOE

Options exchange operatorCBOE Holdings ( CBOE ) has improved its picture on earnings and revenue in recent quarters.

In Q4, earnings advanced 22%, while revenue grew 8%. In Q1, the company stoked EPS 35%, while revenue increased 18%.

The first-quarter growth was impressive because trading volume was lower industrywide.

After-tax margin was 31.2%, the best in six quarters. Pretax margin last year was 48%, an eight-year high.

The company's three and five-year Earnings Stability Factors are 7 and 13 respectively. The gauge runs from 0 (calm) to 99 (wild).

CBOE is the holding company for the Chicago Board Options Exchange. The midcap company offers equity, index and exchange-traded funds options.

Exchange stocks went through a merger period when companies were either making acquisitions or targeted as an acquisition. In 2011, speculation had CBOE as a takeover target.

Mergers can help reduce costs. Once two exchanges merge, they need only one technology platform.

Further consolidation within the exchange space is possible.

CBOE broke out of a first stage, flat base in early January, clearing a 31.05 entry in fast trade. The stock is about 30% past the buy point.

As CBOE advanced, the stock has offered secondary entries. CBOE formed three-weeks-tight patterns in March and April. On Friday, the stock completed a three-weeks-tight with a 41.10 buy point.

The three-weeks-tight pattern can be seen only on the weekly chart. The pattern involves tight weekly closes from one week to the next. The buy point is the high of the pattern plus 10 cents.

The annualized dividend yield is 1.5%.