Editor's note: This column was first published Feb. 6 on

RealMoney.

There is always a steady stream of mergers and acquisitions news to keep the presses, both the black and green ink, rolling, and usually it's tea parties among the recently divorced, looking to form civil unions and accretive stability. But it takes some real venom and emotion to make market battles that determine actual winners and losers, or at least generate trading opportunity.

I see one battle brewing that has important implications across the futures exchange industry: the linkup between the

Intercontinental Exchange

(ICE) - Get Report

and the New York Mercantile Exchange. The ICE is trying bust down the Nymex open outcry monopoly on trading oil futures; it's one of the last exchanges that operates strictly by open outcry, no electronic/hybrid system, during "normal" business hours. The ICE launched electronic trading of West Texas crude last Friday and immediately grabbed some 25% of the total volume traded.

Responses to the trade grab from retail traders ranged from, "That was as easy as ordering a pizza, without the 35% mark-up and a tomato-stained order ticket," to, "I don't trust men and men run machines; so I guess I'm in a bit of a pickle but give me the one that's quicker and won't sleep with my wife."

Seriously, this is just another example of how electronic trading is more efficient, less costly and most importantly

flattens

the playing field between "brokers." Let's face it, one of the only reasons floor brokers are still willing to pay $3.3 million or $24,000 per month just to stand on the floor; think they've done the math and figure they can clear more than that minimum of $288,000 a year by "making a market"? And why is the Nymex so against the ICE, with its electronic platform? Because even though it's Atlanta-based, the ICE's majority owner is based in London (global oil trading, what will they think of next?) and therefore should not be approved by the CFTC, the U.S. governing body for futures trading.

Well, the ICE got approval to begin trading last Friday, and snagged some 25% of trading volume immediately. Sound similar to what the

International Securities Exchange

( ISE) did to the Chicago Board Options Exchange some five years ago? The CBOE is just getting its legs back under it to make a legitimate fight to share the spoils of the profitable options market.

If the Nymex doesn't move toward a more complete and robust electronic platform or consider merging with the

Chicago Mercantile

(CME) - Get Report

to boost volume and efficiencies, then it may find the water views from its exchange floor are best suited for celebrating other, more civil mergers, such as such

J.Jill

(JILL) - Get Report

, which just accepted a buyout offer from

Talbot's

(TLB)

with the potential synergies of a quadruple-pleat with cuff.

The ICE has gained some 5% to $55 per share since it was approved to trade London-based oil futures last Friday. With the Nymex battle on its hands and oil at 20-year highs, there is plenty of money at stake. A low-risk way to play the frisson would be to look at the ICE's March deep-in-the-money $40 calls for $15 -- but the strategy I prefer would be some sort of bullish calendar spread, maybe selling short the February $60 calls and buying the March $55 calls for about a $3.80 net debit. Benefits from front-month time decay reduce the cost of the unlimited profit potential of the long March calls. Let's see who's open out-crying in a few months.

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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