This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

CME: Put Your Stock in This Options Exchange

John: CME Group (CME - Get Report) was getting hammered with the rest of the financials which on the one hand is unfair because its not a bank, but on the other hand represents a tremendous trading opportunity. The reality is, the CME thrives in an environment like this. Chaos creates volatility -- massive volatility -- and that creates record trading volume across their various contracts. Although the price is reflective of what's happening in the market, this is the best thing that could happen for their earnings and with this type of action their earnings are going to be strong.

Let's review the T3/OP video with Jill and Scott to understand more on the fundamentals of the space and CME technicals before we get into into the options play.





Last August CME hit a low of 234.50 before rocketing up to $328.00. As of Wednesday's close this stock is trading at $239.21. I'm looking to buy September series $250.00 calls at these levels. I'm hoping we push through that August low and do a stop run, giving me a chance to get a better price on my call options -- but I'm fine with starting to nibble on them at current levels.

Now over to Jared for his way to play the positive bias...

Jared: One theme this week has been the record trading activity on U.S. exchanges. TD Ameritrade (AMTD - Get Report) reported that trading volumes on Monday were the largest in its history, with new money coming into trading accounts from bottom-picking investors. ( WSJ) Trading volume at CBOE reached a new all-time high for the second day in a row on Monday ( CBOE), and CME reported a new all-time high in trading volume on Tuesday, with nearly 26 million contracts traded. ( Marketwatch). CME noted that all-time product highs were reached for gold futures and options. In short, investors want to buy (and sell, and buy and sell again) what the exchanges are offering.

CME has performed well in recent months relative to its peers. Since April, the stock is down around 16%, while issues like NASDAQ OMX Group (NDAQ - Get Report) and NYSE Euronext (NYX) have declined by 24% and 28%, respectively. CBOE Holdings (CBOE - Get Report) has fared marginally better, but with greater return volatility. Figure 1 shows the performance of these names in percentage terms.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
NYX $0.00 0.00%
AMTD $37.08 0.16%
CBOE $59.16 1.89%
CME $93.98 0.62%
NDAQ $52.62 0.67%

Markets

DOW 18,232.02 -53.72 -0.29%
S&P 500 2,126.06 -4.76 -0.22%
NASDAQ 5,089.3620 -1.4320 -0.03%

Partners Compare Online Brokers

Free Reports