As previously stated, the margins on options commissions are significantly higher than that of equity trades, thus E*Trade will benefit greatly from an increasing number of customers trading options. It should also benefit from a recovering housing market, a segment which has weighed on both earnings and shares since the housing bubble.
E*Trade’s ugly portfolio of housing assets has started to improve as a result of decreasing charge offs and pay downs. Going forward, the company may benefit, once again, by offering home loans. Consumer credit and confidence has improved and demand for homes is starting to ramp up.
As a result of strong partnerships and growing interest in the options market, CBOE Holdings, Inc (NASDAQ:CBOE) is in a great position to drive higher revenue and profits. But if you’re looking for a more diversified play, you might consider one of the brokerages that dabbles in options volume. Ultimately, CBOE Holdings could be considered a solid play on options, without an expiration date.
Nathaniel Matherson has no position in any stocks mentioned. The Motley Fool recommends TD Ameritrade.
The article Betting on Options originally appeared on Fool.com.
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