TheStreet.com E-commerce Stock Index (ticker symbol: ICX) developed by the Nasdaq-Amex Market Group began trading today. The new index is listed on the American Stock Exchange, and consists of a basket of stocks from fifteen companies described by Nasdaq-Amex as “actively-traded companies that generate all or a significant portion of their revenue from commerce conducted over the Internet.”
Strike prices for ICX options will initially be set in five-dollar intervals ranging from $85 to $115 (US$), and will feature “European style” expiration and cash settlement, meaning options may be exercised on the last business day prior to expiration.
According to Clifford Weber, vice president for new product development at the American Stock Exchange, “The volatile nature of this [e-commerce] sector makes options an appealing way to participate in the sector’s development. Because the index tracks the movement of 15 different stocks, company-specific risk is reduced.”
This is the second announcement reported by the E-Commerce Times in the past six weeks regarding the establishment of an aggregate e-commerce stock investment option. On January 15, Chicago-based John Nuveen Company (NYSE: JNC) introduced its own e-commerce portfolio consisting of 35 e-commerce stocks.
It is interesting to note that even though business-to-business transactions are still at the forefront of e-commerce, TheStreet.com index will be driven mostly by consumer-oriented companies.
Included in TheStreet.com E-commerce Index are:
AMZN – Amazon.com, Inc. AMTD – Ameritrade Holding Corp. BKS – Barnes & Noble, Inc. BVSN – BroadVisionInc. CDNW – CDnow, Inc. EGRP – E*TRADE Group, Inc. EBAY – eBay Inc. EGGS – Egghead.com, Inc. HLYW – Hollywood Entertainment Corp. MWHS – Micro Warehouse, Inc. NTKI – N2K Inc. NM – National Media Corp. ONSL – ONSALE, Inc. PPOD – Peapod, Inc. PTVL – Preview Travel, Inc. TheStreet.com E-commerce Index uses “equal-dollar weighting” to ensure that each of the component securities is represented in approximate equal dollar value. Adjustments to the Index are made quarterly in order to ensure that each component stock continues to represent approximate equal market value.
Who Wins and Who Loses
Undoubtedly, TheStreet.com is the biggest winner. After all, it’s not every day that a two-year old online news publication establishes an options index with Amex-Nasdaq. Founded in 1996 and based in New York City, TheStreet.com, publishes daily investment and financial news. The company’s editorial team includes 50 financial journalists and two dozen contributors. Reportedly, its readership includes approximately 200,000 individual and institutional investors.
The likely loser resulting from this announcement is Cybercash (CYCH), one of the first and best-known providers of e-commerce solutions. The company provides online payment processing technology which has been widely adopted by successful e-commerce sites. Nonetheless, the CyberCash stock was not included in TheStreet.com index, nor was it included in Nuveen’s e-commerce stock portfolio, which may very well raise questions among the company’s surprised investors.