CRAMER BACK ON BOARD WITH NYX

Cramer back on board with NYSE Euronext (NYX)

Posted Aug 16th 2007 1:00PM by Brent Archer
Filed under: Analyst reports, Good news, Industry, NYSE Euronext (NYX), Options, Technical Analysis
NYSE Euronext, Inc. (NYSE: NYX) opened at $69.25. So far today the stock has hit a low of $65.05 and a high of $69.25. As of 11:15, NYX is trading at $67.10, down $3.25 (-4.6%).

After hitting a one year high of $112.00 in November, the stock has been sliding over the past ten months. Jim Cramer still likes NYX, despite its ugly chart. He says that it is a great business with a really bad stock chart, calling it the "victim of vicious short-selling." Though the stock looks "pinned" at $70, Cramer believes in the company and believes it should be higher. Back in July, Cramer said that he would start buying NYX when it reached the $60s, and it looks like he is sticking to that plan. Technical indicators for NYX are bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk and leverage returns. For this particular trade, we will make a 14.9% return in 5 months as long as NYX is above $50 at January expiration. NYX would have to fall by more than 24% before we would start to lose money.

NYX hasn't been below $50 since last spring and has shown support around $66.50 recently. This trade could be risky if the exchanges slow down due to this rocky market, but even if that happens, NYX could be protected by the historical support it found about a year ago between $55 and $60. Plus, a story came out this morning that exchanges are likely to benefit from the recent drop as sellers have pushed volume higher.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: At publication time, Brent neither owns nor controls positions in NYX.

Tags: Investors Observer, InvestorsObserver, Jim Cramer, JimCramer, NYSE-Euronext, NYX, options