Get Options Protection in NYSE Euronext

This column was originally published on RealMoney on May 22 at 1:46 p.m. EDT. It's being republished as a bonus for TheStreet.com readers.

Cramer's bullishness on NYSE Group(NYX) is well documented, and it's not surprising that many investors have been following his advice and getting long the stock. The shares have bounced some $7, more than 8%, to $87 in the past week and suddenly I'm receiving a batch of email asking for suggestions about ways to use options to lock in profits and reduce risk yet maintain upside exposure.

What follows is by no means a complete list of some of the options available, nor is it specific to NYSE. Many other stocks have racked up impressive gains; for example, in the exchange space, IntercontinentalExchange(ICE) has been back on a tear, gaining $30, or 25%, to hit $150 in the past three weeks, which are more appropriate candidates for taking some money off the table.

First, be clear the only thing that truly and fully locks in any current profits is selling and closing the position. Everything else is about paring the position, partial profits and reducing, not removing, risk. That means anything but selling out will cost you in some fashion, whether in the form of a higher cost basis or limited profit potential.

Here are several routes to choose from, and I'm not endorsing one over any of the others:

Create a calendar spread. In NYSE, you could own some June $90 calls for around $2.50 per contract. This would reduce cost, provide some downside protection and capture some time decay/premium. It does cap your upside by creating an effective sale price of $92.50 per share.

That means you'd maintain another $5.50, or 6.5%, of upside over the next month even if the stock rises above $90 and the calls are assigned and the stock called away. Of course, you can always make another adjustment such as rolling to a higher strike to stay long the stock.