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Option Brief: Visa Inc (NYSE:V) ran to a record high today, thanks to a halo lift from sector peer MasterCard Inc (NYSE:MA). The positive momentum has prompted a surge of call volume in V's options pits, with the contracts trading at more than five times their expected intraday pace. One of the more active positions is the weekly 12/13 205-strike call, which has seen 2,253 contracts change hands, mostly at the ask price. Implied volatility has ticked higher, and volume is easily outstripping open interest, making it safe to assume that a fresh batch of bullish bets has been initiated.
With V lingering near $207.72, these short-term calls are currently in the money. In fact, based on the volume-weighted average price (VWAP) of $1.12, the calls have already surpassed the breakeven mark of $206.12, which is the strike price plus the VWAP. Based on the call's delta of 0.73, there's a roughly 73% chance the option will finish in the money at Friday's close.
As mentioned, Visa Inc (NYSE:V) hit its loftiest level ever of $207.91 this afternoon, after fellow credit card concern MasterCard announced a trio of fundamental developments. However, today's burst of buying power is just more of the same for V, which is up more than 36% year-to-date. From a longer-term perspective, the equity has enjoyed a lift higher from both its 10- and 20-week moving averages since April 2011.