OptionsXpress Gets New Investment

Discussion in 'Options' started by AAAintheBeltway, Jan 22, 2004.

  1. From RealMoney column:

    Despite troubles such as the struggling American Stock Exchange and the ongoing debate over integrating market makers with electronic trading platforms, the overall outlook for the options industry looks quite good. For example, OptionsXpress, a privately held online brokerage firm, just received an $89 million investment from Summit Partners, a Boston-based private equity firm. "We believe in the growth of OptionsXpress and its management's ability to execute and deliver superior and innovative service," said Chris Dean, a Summit vice president.

    Summit, which has been in business for over 20 years and has invested in more than 250 companies during that time, certainly seems to have put its money on an up-and-comer. In 2003, Barron's named OptionsXpress the No. 1 online broker in its annual survey. While it's hard to peg a valuation, some numbers to scratch on napkins include: 75,000 accounts, revenue of $50 million in 2003, an expected quarterly growth rate of 50% through 2004 and a customer base that accounts for nearly 4% of all options volume. (Summit's $89 million investment gets it a minority ownership pegged between 25% to 40%.)

    For its part, OptionsXpress views the cash infusion as "a means to remain independent and focus on customer service and expanding trading tools, education and efficiency of execution," said David Kalt, the company's president. "This allows us to keep our eyes on the ball and chart a course of steady growth," he said.

    The option market's pie is still growing, and OptionsXpress is well-positioned to grab a bigger slice based on a sound business model and disciplined management decisions. You could do well by following their lead and making sure your strategy doesn't cause you to take on more than you can handle during this frenzied market.


    The author, Stephen smith, credits most of the surge in options volume to retail traders buying calls on low-priced naz issues. He does mention that index put/call ratios show heavy put psoitioning.
  2. The Journal reported that they're being shopped to a number of big brokers. It'll be interesting to see where they land and whether the appeal of their niche focus gets lost after they're subsumed.
  3. made it sound like since they got the cash infusion they were no longer considering being acquired. If they did get swallowed, I cant see it being a positive thing though :(
  4. Sounds like they will now stay separate with that cash infusion;

    sound like most of those put buyers are too early or still fighting the tape like last year.