Mott Capital Management, LLC on Cboe Global Markets, Inc.
Thesis
Mott Capital used proceeds from a reduction in Illumina to buy options-exchange operator Cboe during the quarter. Michael Kramer believes options trading has become an increasingly important part of financial markets and should continue to grow, supporting transaction-fee revenue. Shares had sold off amid worries that prediction-market venues such as Kalshi would introduce competing derivatives. He viewed the decline as an opportunity because Cboe’s established listed products should be difficult for competitors to displace.
“However, Cboe has listed products that will be hard to replace, and taking advantage of that sell-off seemed like the right move.”
Key risks
- Prediction-market providers such as Kalshi could introduce competing derivatives.
- Competition could erode the transaction revenue opportunity from listed options.
- Investors may continue to reprice the shares if alternative trading venues gain traction.