What We're Trading: Prime Time to Buy Nasdaq Inc (NDAQ) Options

Find out why we like NDAQ for a contrarian options trade

Dec 13, 2016 at 2:04 PM
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Exchange operator Nasdaq Inc (NASDAQ:NDAQ) has surged 18% year-to-date, with strong December gains putting the shares back atop the 10-month moving average. This trendline has historically been supportive, as has the 50-week, from which the stock just bounced. In other words, things are looking up for NDAQ.




The stock could get an additional boost as skeptical brokerage firms begin to change their tune. Despite NDAQ's outperformance, nearly half of the 12 analysts tracking the shares rate them a tepid "hold." A round of upgrades could create tailwinds.

For options traders, now looks like a good time to purchase premium. NDAQ's Schaeffer's Volatility Index (SVI) is 20%, ranking below four-fifths of readings from the previous year. In other words, the market is pricing relatively low volatility expectations into short-term options at the moment.

Finally, our recommended call option has a leverage ratio of 10.5, and will double in value on just an 8.7% gain in the underlying stock.

Subscribers to Schaeffer's Weekend Alert service received this NDAQ commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Alert is one of our most popular trading services.

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