NDAQ (Nasdaq Corp)

NDAQ has been a strong horse over the last couple of years. It ran from below 10 to above 40 in 2005 and then spent most of last year trading in what looks to be a large top formation. The company continues to grow earnings but I am a bit concerned that so much competition in the business with many ECN's and exchanges competing for volume could be detrimental to the company's forward earnings. The stock isn't cheap but is probably reasonably priced given it's growth history.

Yesterday the company hosted a conference call after stating the day before that it lost its bid to acquire the London Stock Exchange. The stock had already begun to sell off in strong volume so I started building a short position as the conference call began. Sure enough the sellers got more aggressive as the day went on and I slowly added to the position until i had 10,000 short at an average price right about 34.00. The stock ended up closing at 31.10 so it was a nice trade in an otherwise challenging day for me.

Towards the end of the day I decided to take a little of the quick profits by buying in 5,000 or half of my position and buying 50 of the March 30 puts as they were less than $1.00. Subsequently, this morning when the stock experienced a relief rally, I bot another 50 puts at $0.85 to give me short exposure while capping what i can lose on this position. I feel confident that the momentum will pick up as momentum investors and swing traders will become uncomfortable with their positions and liquidate.