Charles Schwab said Monday it is buying online brokerage services provider OptionsXpress for $1 billion in a move to capitalize on the profitable business of options trading.
OptionsXpress stock jumped $2.57, or 16.7 percent, to $17.90 Monday. Schwab shares rose 9 cents to $17.65.
The discount broker said OptionsXpress shareholders will receive 1.02 shares of Schwab stock for each share of OptionsXpress. Based on Schwab's closing price Friday, the deal is valued at $17.91 a share.
The deal helps Schwab bolster its options trading business, which is becoming increasingly popular with online traders. The company said its options trading clients "tend to be among the larger, more active and longer-standing" of their clients. OptionsXpress adds to that client base, and Schwab will be able to offer them additional investing, brokerage and banking services.
Schwab rival TD Ameritrade Holding Corp. moved to beef up its platform with options trading in 2009, as it acquired options trading specialist thinkorswim Group Inc. for $606 million.
Schwab expects the OptionsXpress acquisition to boost earnings over the first year of combined operations. On a pro forma basis, the two companies would have produced net revenue of $4.48 billion last year.
OptionsXpress Holdings Inc., based in Chicago, provides brokerage services for equity options and futures trading. At the end of February, the company had 385,200 client accounts and $8.1 billion in client assets.
Charles Schwab Corp. had $1.6 trillion in client assets at the end of the same period.
The deal is expected to close in the third quarter.