NYSE Euronext (NYSE: NYX - option chain) stock is falling today after posting a fourth-quarter loss of $1.34 billion, or $5.06 per share, this morning. Excluding one-time items, NYX earned $137 million, or 52 cents per share, during the quarter, missing analysts' estimates of 56 cents per share. NYX was hurt by lower list fees and derivative revenue during the quarter. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on NYX.This morning, NYX opened at $21.30. So far today the stock has hit a low of $20.16 and a high of $22.03. As of 12:45, NYX is trading at $21.40, down $1.50 (-6.5%). The chart for NYX looks bullish and S&P gives NYX a positive 4 STARS (out of 5) buy ranking.
For a bearish hedged play on this stock, I would consider a June bear-call credit spread above the $30 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 14.9% return in four and a half months as long as NYX is below $30 at June expiration. NYX would have to rise by more than 39% before we would start to lose money. Learn more about this type of trade here.
NYX hasn't been above $30 except for one day since November and shown resistance around $23.50 recently.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in NYX.
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