Now the game seems to be up. I first heard it from optionsXpress (OXPS) when it said on its call that retail is returning to options and the low-dollar fascination is ending.

OptionsXpress shares look overvalued after a strong run. The firm's bid to boost growth by buying a seminar group seems ill-advised, based on the record of the group's founder.

Neutral - Price 12.84 on April 7
by Merriman Curhan & Ford

We expect an in-line or better-than-expected 1Q09. In March, average daily options volume for the industry was up 17% month-over-month and 12% y/o/y. Our estimates for optionsXpress assumed a 5% m/o/m increase; hence, we could see modest upside to our assumptions.... OPXS' peers [also report] that, during March, new account additions were very strong, order size increased m/o/m (good for average revenue per trade), and institutional trading was strong -- [good for] optionsXpress' Open E-Cry business. OXPS is trading at an inexpensive [enterprise value/free-cash-flow ratio] (FY09-E) of 5.5 times, although FCF is seen declining 30% in FY09, to $100 million ($1.70 a share). OXPS has $204 million in cash ($3.42/share) and no debt. Market cap: $767 million.

balance sheet as clean as a virgin :)

RedChip Independent released a 3QFY08 update for OXPS and has issued a “Hold” rating. OXPS continues to deliver modest increases in revenue and net income. In 2Q08, OXPS’s revenue increased 1% sequentially, to $61.6 million from $60.8 million in 2Q07, and 4% year-over-year from $59.4 million.

10.4

10.4

I do think more and more people are using options for protection and quick money. The stock is cheap and should have growth.

Exchange / Finance

28%

pricing pressure

Over-hyped in an increasingly competitive options-trading market.