Thursday, January 4, 2007

Does Anyone Else Other Than Me Like NYX?

I could not believe my eyes when I read Morningstar's report on NYX dated 11-21-06. I can email you the actual pdf or you can access it via their website as a premium subscriber (sorry).

They actually priced NYX's fair value at $128.00 which is way above where it is currently trading at around 95.00 today. Trust me. This is extremely uncommon for Mstar to make a higher target price. It, however, does not mean that it will go straight to $128 but I found it interesting.

I know, I know. What are they thinking? Here's what I'm thinking.

Technically, the stock has enjoyed a nice Q4 rally from the mid 70s to 110 but it has now pulled back to the mid 90s. I don't necessarily like the extension of the pullback but I like these levels better than 100.

The options I like for a longer term bullish call play is the JUN 07 95 Calls currently trading for $11.20. According to my option pricing model, fair value for the options is at $13.20. I don't know about you, but I like buying option premiums at a discount.

These contracts currently trade with a .60 delta and IV is mildly rising around 40% just above the 52 wk low levels. That gives a nice opportunity for the IV levels to rise and hence we might be getting some "jungle juiced" premiums.

I'm waiting for a little pullback in the overall markets just to feel better about being a long rider at this stage of the beginning of the year. I'll look for Monday or Tuesday to get into a position. I'll inform you all of my entry price and so forth.

Keep in mind that NYX is a little more volatile than my previous post selections so buyer beware.

Here's what Jim Cramer of and MadMoney host had to say about NYX (if anyone cares) .

Cramer's growth stock for the new year is the NYSE Group. "If you're comfortable taking a few risks to make more and more mad money, NYX is for you," he said. Cramer believes the NYSE will grow, blow away its estimates and "keep flying" because its main objective is to make money. The company is shutting down trading rooms and laying off people, replacing them with faster and cheaper machines.

Cramer said the stock has great revenue growth and a sound cost-cutting strategy, which should save the company millions of dollars. In addition, it has the lowest operating margins of all publicly traded exchanges and "low, beatable estimates," Cramer said.

The only reason NYSE shares are down is because of arbitrage pressure from its pending Euronext acquisition, said Cramer, and that pressure shouldn't last. The NYSE is ready "to conquer the world" and should go to $240 a share, Cramer said.

Grab a vine and let me know what your thoughts are on NYX.