CBOE Holdings Inc. (CBOE)

Up 28.5% in July. They reported a solid quarter last week. It's not expensive.

Reason for huge drop off is a website that bypasses the whole exchange mechanism. But this new website is incredibly leveraged, unregulated, and incredibly risky.

Makes $$ from its proprietary products. Actually owns the VIX, and they can charge almost what they want -- when the world is bizarre (CFA technical term ;) this product does particularly well.

Offers a consistent 50% return on capital and is not expensive nor volatile. Has a clean balance sheet. You can buy a tranche now.

He recently bought it. There's strong engagement in the financial services industry, including heavy options volumes. 

Historically, the exchanges have been great performers, but lately they have caught fire and are outperforming the market. Tailwinds are higher stocks, more volatility in April followed by aggressive buying as investor piled back into the market. If this high volume declines, though, so will the indexes. ETFs trading is also surging as are cryptos which concerns him because cryptos are risky. He prefers that people buy and hold quality stocks. You can buy options, only if you do it carefully. Can the stock of these exchanges keep running after such a big move? Yes, and the stocks are not that expensive. Though near all-time highs, as long as these conditions, including volatility, endure, these stocks will keep winning. CBOE posted 14% YOY earnings growth and double-digit net revenue growth across derivatives, cash and spot markets. The proliferation of derivatives trading by retail investors is another boost.

An exchange for stocks, ETFs, and crypto. Smaller than NYSE or NASD, yet still a $26B market cap and the most exciting. Focuses on derivatives. ROC profile is phenomenal. Likes the space in general. Trades at 19x EV/EBITDA. Great chart, steadily moves up and to the right. Growth was 20% last quarter. Yield is 1.02%.

Chicago Board Options Exchange. Options give you the right to buy or sell an underlying stock/index/commodity at a certain price for a certain length of time. Higher margins than just trading stocks. Taskmaster of proprietary products. Exclusive license on the VIX as well. Yield is 1.09%.

The business of exchanges is very good, sees growth. On a day like today when the market is down, trading exchanges are up because volumes go through the roof, with profitability right behind. Even talk of trading being allowed 24 hours a day.