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Option Brief: Visa Inc (NYSE:V) tagged a new all-time high of $203.90 this morning, on the heels of yesterday's news that the company's board approved a 21% dividend increase. Although the stock has since dipped into negative territory to hover at $201.90, option bulls have flocked to V's options pits. In fact, the security's call volume is running 70% above the intraday norm, and more than four times the number of puts traded. Most popular is the soon-to-expire weekly 10/25 205-strike call, where 45% of the 2,031 contracts exchanged have done so at the ask price.
Also garnering notable attention is the November 205 strike, which has seen 1,171 calls change hands -- a large portion of them at the ask, pointing to buyer-fueled volume. Meanwhile, implied volatility has ticked higher, implying the creation of fresh long positions. Data from the International Securities Exchange (ISE) also confirms the presence of some buy-to-open activity at this strike.
In other words, the speculators are hoping V will ascend past the $205 level by the close on Nov. 15 -- a time frame that encompasses the firm's upcoming quarterly earnings report. However, since short interest surged by 23.6% during the last two reporting periods, it's possible that some of these out-of-the-money call buyers are looking to hedge their bearish bets in the event of an earnings-induced surge.
Visa Inc (NYSE:V) has been a standout on the technical front, sporting a gain of more than 33% year-to-date, and close to 47% year-over-year. The credit card giant will step into the earnings confessional after the close on Wednesday, Oct. 30, and has trounced consensus estimates in each of the past eight quarters. Even better, the shares have averaged a 2.1% return the day after V posted its results.