Options Trading News

November 19, 2013  Tue 12:18 PM CT

The bulls think it will be a happy New Year for Nasdaq OMX Group.

optionMONSTER's Heat Seeker monitoring program detected call buying in the financial exchange early today, and the shares have been powering higher since. The activity started just seconds after the opening bell, focusing on the January 37s and the January 40s. Some 1,500 of the 37s traded, mostly for $1.48 to $1.95, along with 1,000 of the 40s for $0.23 to $0.64. Volume was more than 10 times open interest at both strikes, indicating that new money was put to work.

These long calls lock in the price where NDAQ can be purchased, letting investors cheaply position for a rally and generate significant leverage if the stock continues to climb. In the case of today's activity, they can now rest easy knowing the stock won't run away from them. (See our Education section for more on how to manage risk--both upside and downside.)

NDAQ is up 1.97 percent to $38.34 and is back to an old peak from September 2008, shortly before the subprime-mortgage crisis sent equities crashing. The company's last earnings report beat expectations, matching strong results for other financial exchanges. Our proprietary researchLAB scanner shows the industry quietly pulling ahead of the broader market in the last year.

Despite operating a major option exchange, NDAQ usually trades a paltry 315 contracts per session, but volume is 9 times that amount today. Calls outnumber puts by more than 100 to 1.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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