Options Trade
Nymex Holdings Inc.
Wednesday’s Intra-day Price: NMX – $131.73
I have been blogging about NMX for several months (since December 2006) and have owned shares in the past but sold prematurely in March. I recently wrote about an accumulation area near $130 and the stock is currently trading within that area.
However, I am not in a rush to establish any positions before my trip to Hawaii next week. I will have internet access but I don’t want to be on the computer or making any trades while on vacation so my hands are tied for two weeks. I want the stock but I would prefer a lower entry although it is not extremely important because the trade is long term.
Dealing with possibilities; NMX could make a 50% run over the next year based on institutional accumulation and the success of sister stocks such as CME, BOT & ICE. I am not in the business of predictions so I can’t tell you if NMX will follow suit.
So, instead of buying a lot of 100 shares for $13k, I am thinking about buying one January 08 call option (leverage my money for less exposure). Many of you already know that I am not the best investor when it comes to options as I have not had much success (compared to trading). Aside from one superstar options trade in Tenaris (TS), I tend to stick with buying and selling equities based on track records.
I am looking to place a market order for 1 Jan 08 call option with a current ask of $12.20 or $1,220 (for control of 100 shares). I am also thinking about placing a market order to buy this same call with one contingent: the actual asking price must be trading lower than $125 (good til cancelled) while I go on my trip. It’s not much of a difference so I may just place the trade after posting this entry but a further correction is also a possibility (down towards $122-125). I don’t want to place the order with the contingent of $125 and have the trade miss the trigger while I am away and then make a run. That would really piss me off (especially if the ask came as low at $125.15 or so).
What do you think? What would you do? I am very curious to hear your opinions (don’t worry, it won’t affect my final decision as my mind is already made up).
Institutional Analysis (latest reporting period):
Held by Institutions:
Money Market: 111
Mutual Fund: 94
Other: 2
Number of New Positions: 200
Number of Positions Sold out: 2
Shares Bought last Period: 13.6 mil
Shares Sold last Period: 7,400
Value of Shares Bought: $1.8 bil
Value of Shares Sold: $1.0 mil
Top Institutional Holder: General Atlantic LLC
8.1 mil Shares for 0.28% of Portfolio
Total Equity Value of Portfolio: $2.8 billion
Next Four (largest) Institutional Holders:
Lone Pine Capital – 2.058 mil shares
Morgan Stanley – 368k shares
Bank of America Corporation – 362k shares
Hoplite Capital Management, LLC – 222k shares
I would buy the stock and forget about it.
Enjoy your trip.
Hey Chris,
great post and research as always. I think the long calls could make a great play. You are probably going ATM or ITM (80-85 Delta?) I would guess, depending on where and when you buy it, but if you are going slightly OTM and you think it might take a while to move, have you considered doing a calendar? If you get an 08 with lots of extrinsic value, and its slightly OTM, you could sell a front month call against it and lower the cost of the 08 significantly. This could also work if it pulls back after you buy it and it looks like the pullback could be prolonged, like a month or so at least. You could sell a front strike 30 days or less out and collect some premium before it resumes its move. Just some “options” to go with your, options!