In article, “CME Buying CBOT”, we analyzed Chicago Mercantile Exchange’s (CME) purchase of CBOT (BOT) with an eye for a bullish strategy for CME. We continued the CME bull put credit spreads saga and for the month of May, the strategy returned a very nice +12.4% return. This strategy has returned over 52% in only six months.
The bidding war between CME and ICE for CBOT continues as outlined in the article, “Two Exchanges May Enter Bidding War to Acquire the Chicago Board of Trade”. CME recently upped its bid for CBOT, but its bid is still not higher than ICE’s bid. Even if the CME/CBOT merger does not come to fruition, CME is looking bullish and using PowerOptions powerful stock options tools to search for potential candidates returned the following bull-put credit spreads stock options position:
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|Chicago Merc. Exch. Hldgs. Inc|
|CNMRP||07 JUN 480.0 (22)||2.6||CNMRN||07 JUN 470.0 (22)||1.6||11.1||1|
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The bull put credit spreads positions selected for CME can be entered for $1000 per contract with a potential return of +11.1%, in only 22 days. As long as the price of CME remains above the short strike price at options expiration in June, the position will be fully profitable.If the stock price of CME closes below the short strike price of $480 at options expiration the position will not return the maximum profit and could potentially result in a loss, possibly a significant loss. If the stock price of CME is below $470 at stock options expiration, the position will essentially lose everything that was invested except the initial net credit of $100/contract.
Competitors for CME include: CBOT Holdings Inc. (BOT), Deutsche BÃ¶rse AG (private), LIFFE (Holdings) plc (private), and Nasdaq Stock Market Inc. (NDAQ).
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[tags] Deutsche BÃ¶rse AG, LIFFE (Holdings) plc, BOT, CBOT Holdings Inc., NDAQ, Nasdaq Stock Market Inc., investment strategy, iron condor, option income, poweroptions, selling naked puts, stock option trading, stock options [/tags]