NYX’s fundamental and technical analysis

Posted by Jack Haddad on March 10, 2008 at 11:39 pm

On March 6th 2008, NYX said that trading volumes in February were very strong. The Euro Cash market volumes rose 43% year-over-year, and US Equities volume also rose by a 20% growth rate. Derivative volumes also rose on both sides of the Atlantic – European derivative volume rose by a 37% metric, and US derivative volume on the NYSE rose by over 70%! Morevoer, Euronext’s plans to expand into areas beyond just equities trading is paying off, particularly in the derivatives industry. NYX is also actively closing on its deal to acquire the AMEX.

The company is expected to achieve $3.29 in earnings per share this year (ending Dec 2008), putting the current P/E ratio for the Company at roughly 14x its expected calendar year forward earnings. Earnings for 2009 are forecast in a range from $4.56 per share in EPS on the high end, all the way down to $3.87 on the low end. I foresee an annual rate that is in line with that $4.00 per share estimate, possibly slightly higher, accounted for by additional tax savings, and by a probable acquisition of an options exchange (or additional other exchanges, for that matter).

There has been a radical drop of about 20% in the shares within the latest month, leading to a trailing 52 week performance of these shares of -28%. We could see stabilization at current levels, and then hope to see additional improvement in the RSI and MACD lines, which measure relative strength and divergence from the moving averages, respectively. Previous highs were in the $105 - $110 range, so today’s $60 price is a solid discount to those highs.

On any shares purchased at or below $60, consider writing June 2008 covered calls at the $70.00 strike price or higher against this long position. Currently those calls are (Friday 3/7/08) bid at $2.65 per share. Also, one ,might do ”put option strategy, calling for investors to sell, or “write” the June and September 2008 expiration put options on NYX at the $60.00 and $55 strike price. Current premium levels reflect that investors implementing these positions will enjoy either a nearly 10% return on their committed capital (assuming no stock is assigned and the option premiums are all kept), or they will be able to purchase NYX stock at an adjusted net price level of roughly $52.50 per share (accounting for option premiums), a significant discount to the present market price. The final price an investor will pay is dependent upon how many of the options are assigned over the life of the position and the transactions costs.

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