NYX (NYSE Group)

NYSE is a very old name but has a new face. After merging with Archapelago last spring the stock was listed under the ticker NYX. The company has finally begun to embrace technology more aggressively and has been able to operate much more profitably over the past 3 quarters.

The stock shot out of a well formed base in November running quickly from 80 to 110 in a few short weeks. The industry is very attractive with corporate activity picking up and a profitable environment. After its run the stock pulled back to the 50 day which often acts as a support level. Friday's action had the stock breaking back above 100 in the highest trading volume in months. I picked up a 3% position on this buying frenzy and expect follow through very quickly.

The stock is not cheap even though earnings are supposed to be 45% higher in 2007. However, the company is in the middle of much change so it is hard for analysts to get accurate expectations. The market is obviously pricing in positive earnings surprises which could drive the stock even higher but adds a degree of risk to the equation. I would be willing to sell calls from time to time to hedge my risk to a sharp pullback. One thing that helps is that the call premium is typically attractive in this name.

Feb 2, 2007

It must have slipped my mind but i wanted to post it late rather than never... Last week as I was becoming a bit concerned about the market, I decided to hedge exposure in some names. NYX was one of them and while the stock wast trading right at 100, I sold the Feb 100 calls for $4.10 which is decent premium. This gives me a little room for the stock to pull back and I can decide in a few weeks whether to buy the stock in to keep the position (if the calls are in the money) or whether to let it be called away.

Feb 10, 2007

Well the market and NYX more specifically showed some pretty troubling signs yesterday. The stock traded down on volume significantly above average for the third time in the last 6 sessions. Areas of short-term support were broken and my calls now look very unlikely to be assigned. In fact much of the premium had been wrung out of them so I was able to close the calls for 15 cents and then sell the stock at 92.61 for a disappointing loss but the offsetting gains in the call position helps mitigate my loss and keep it from doing much damage to my portfolio. I now have another slot freed up that I can put something that is working better into and keep from dilluting my energies looking at too many names.