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) - Get Report

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.

Replace the stock with call options.

Just how much risk you want to remove and how much upside you believe the stock could achieve will determine which strike price to use. This is definitely a situation in which I would endorse the use of in-the-money calls, because it makes use of the financing tool aspect that the leverage options provide.

For example, you can buy the December $80 calls for about $14.40 per contract. This means you are paying about $7 in time premium but have reduced your risk about 80% while maintaining nearly the same upside potential over the next seven months. Just be sure to buy only the number of calls that equate to the number of shares you own, not the

dollar amount

.

That is, if you own 1,000 shares of NYX, I'd buy 10 call options, which will cost about $14,500. I wouldn't buy $87,000 worth of calls, which would be about 60 contracts.

Create a married position by purchasing some puts.

Or reduce the cost by buying a put spread. For example, the September $85/$75 spread is trading around $2.50. This basically locks a sale price at $82.50 while maintaining unlimited upside. Be aware, this does raise your cost basis and the spread only offers protection down to the $75 price level.

Buy the above put spread but also sell a call spread to finance that cost.

I'm thinking in this case that you could sell the July $95/105 call spread for $1.50. That would reduce the cost of the put spread to just $1, or lock in a sale price of $84 per share.

The upside has a little bit of a curve between now and the July 20 expiration. It's clear to $95, takes a dip as shares pass across $100 or the middle of the spread and then becomes wide open again above $105 or after the July expiration. The put protection remains in place until the September expiration.

Sell half the position.

And use a trailing stop loss on other half.

Sell the whole position and buy a call spread.

For example, the September $90/$100 spread can be bought for around $3.50 net debit. This takes significant money off the table while maintaining some upside with limited risk.

Again, this is by no means a complete list but I hope it provides a good start for thinking about the various ways options can be used a tool to not only maintain profit potential but also manage risk.

Steven Smith writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He was a seatholding member of the Chicago Board of Trade (CBOT) and the Chicago Board Options Exchange (CBOE) from May 1989 to August 1995. During that six-year period, he traded multiple markets for his own personal account and acted as an executing broker for third-party accounts. He appreciates your feedback;

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