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.

 

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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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