Draper-based INVESTools Inc., a provider of newsletters for investors, said it will buy closely held online broker thinkorswim Group Inc. for about $340 million in cash and shares to expand into the options-trading business.

With the purchase, INVESTools will become the second publicly traded options broker, after Chicago-based optionsXpress Holdings Inc. last year sold shares in an initial public offering. The acquisition gives INVESTools an entry into the $1.5 trillion options-trading industry at a time when turnover of the contracts is growing twice as fast as stock trading.

"It's just another case of a company trying to M&A its way to a higher share price," said Ivan Feinseth, a managing director at New York-based Matrix USA LLC. He has a "strong sell" rating on the company.

Shares fell $1.16, or 12.3 percent, to $8.30 in Nasdaq Stock Market trading as investors worried the acquisition wouldn't turn around a company that's lost money in the past two quarters and the five years before that.

INVESTools will pay thinkorswim shareholders $170 million in cash and 19.1 million shares, it said in an e-mailed statement. Given the drop in the value of the company's shares Tuesday, the transaction is worth $328.53 million.

INVESTools until now has referred students wanting to open trading accounts to optionsXpress and Charles Schwab Corp.'s Cybertrader Inc. unit.

With the purchase of thinkorswim, it will be able to offer its students brokerage services once they graduate from its programs, said Chief Executive Lee K. Barba.

"The lifetime value of our students is now extended and increased by the recurring value of our students who are now opening brokerage accounts," Barba said in a telephone interview from New York. "We strongly believe it's accretive in the first year of operation."

The acquisition will be completed in January, he said.

INVESTools, founded in 1983, offers courses in investing costing anywhere from $995 for a one-day course to more than $20,000 for a two-and-a-half-year program.

Shares fell Tuesday because of "a transition of our investment base" as the small- to mid-size hedge funds that are the company's biggest holders are replaced by larger institutional holders, Barba said.

U.S. options trading in the first eight months of this year increased 42 percent from the same period a year earlier, according to Options Clearing Corp., the Chicago-based company that clears all trades. The number of shares that changed hands for companies listed on Nasdaq and the NYSE rose 19 percent, according to data on Nasdaq's Web site.

Options are the right, without the obligation, to buy or sell an asset at a set date and time.