I’m Banging the Table

Exchanges Continue to Move

By Bryan Bottarelli
Friday, April 20, 2007 12:39 PM EDT
Fri, 20 Apr 2007 16:39:00 GMT

Dear Bottarelli Research Member,

If you’ve been a Charter Member for a while, then you know my view on publicly traded exchanges. In short, I consider them the single best sector niche that you can own today — both from a trading standpoint and from a longer-term investing standpoint.

The top three names in this young and booming sector include NASDAQ Stock Market (NDAQ – NASDAQ), NYSE Euronext (NYX – NYSE) and InterContinental Exchange (ICE – NYSE).Right now we’re holding call options on two of these three stocks — specifically the NDAQ June 30 Calls (NQD FF) and the NYX May 95 Calls (NYX ES).

Today’s top performer is the NDAQ. As you can see by the chart, the stock is finally moving above its 200-day moving average on the heels of reporting net income of $41.8 million ($0.29 per share) compared to net income of $26.2 million ($0.22 per share) a year earlier. I honestly think the stock can re-test its recent high of $37.00, and perhaps get as high as $40, as merger and takeover speculation continues to circulate the marketplace.

NDAQ

As I write, your NDAQ June 30 Calls (NQD FF) have traded as high as $3.20 today, good for a 50% gain off your $2.12 entry price. So I’ll tell you what. If you can get filled at or above $3.10, then let’s go ahead and lock in these profits today. After all, we can always re-enter a new series of June calls on any intra-day price dips, so let’s take our money off the table (at least in the short term).

PLAY: Sell your NDAQ June 30 Calls (NQD FF) at or above $3.10, good for the day. If prices do not trigger by the end of the day, maintain this position into next week.

Also included in my bullish thesis is NYSE Euronext (NYX – NYSE).

NYX

Although today’s up-move certainly isn’t as strong as I would like to see, the trick here is to always be in position to catch NYX on a strong up-day — and that sometimes means withstanding flat days like this. As you’ve seen with NDAQ, all it takes is one good day — or week — to get handsomely rewarded, so maintain your NYX May 95 Calls (NYX ES) into next week.

And as always…

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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