UPDATE 2-CBOE profit beats Street as trading rises

* Second quarter profit 44 cents/share vs Street view 41 cents

* Revenue up 10 percent to $132.6 million

* Third-quarter volume so far disappoints; July trading down 9 pct

By Ann Saphir

CHICAGO, Aug 2 (Reuters) - CBOE Holdings Inc, which runs the biggest and oldest U.S. stock options exchange, reported a higher-than-expected quarterly profit on Thursday as trading volume increased.

The parent of the Chicago Board Options Exchange said second-quarter net income rose to $37.9 million, or 44 cents a share, from $32.6 million, or 36 cents a share, a year earlier. Analysts had expected 41 cents a share.

But investors looking for that trend to continue may be disappointed. Last month trading fell 9 percent from a year earlier to an average of 4.15 million contracts a day. Index options, among CBOE's most profitable contracts, led the decline, falling 18 percent. Fees from trading make up the lion's share of the company's revenue.

CBOE Chief Executive William Brodsky has struggled to satisfy investors who bought into the company's initial public offering little more than two years ago with high expectations the company would be quickly sold to a bigger rival.

The global wave of exchange mergers subsided before Brodsky found a willing partner, and the company's shares, which initially sold at $29, have only twice exceeded that level. Shares closed Wednesday at $28.40.

Now, the company's growth prospects hinge largely on its ability to boost trading in contracts it offers exclusively, including options on the Standard & Poor's 500 Index and the CBOE VIX fear index. Growth opportunities also include plans to launch new additions, like a new volatility index contract based on the Nasdaq 100 Index.

CBOE also operates a futures exchange on which that contract trades.

Revenue in the second quarter climbed 10 percent to $132.6 million, the company reported on Thursday, topping analysts' expectations for $128.5 million. Trading volume rose 8 percent, while expenses rose just 4 percent.

CBOE said revenue from exchange services and other fees -- which typically accounts for about 6 percent of overall revenue -- is expected to be $27 million to $29 million for the full year, up from prior guidance of $24 million to $26 million.

CBOE late last month boosted its quarterly dividend by 25 percent to 15 cents a share and authorized a share repurchase program of $100 million.