Stocks quoted in this article:
Visa Inc (NYSE:V) -- which is slated to join the Dow Jones Industrial Average (DJI) after this Friday's close -- was on the bullish trading radar yesterday. Roughly 11,000 calls switched hands through the course of the session, representing a 16% mark-up over the norm. By comparison, just over 5,900 puts were exchanged.
Leading the pack was the out-of-the-money September 195 call, where 2,265 contracts crossed at a volume-weighted average price (VWAP) of $0.44. Since the majority of these calls traded at the ask price -- and open interest rose at this strike overnight -- it's safe to assume new positions were added here.
By purchasing the calls to open, speculators are counting on the credit card concern to muscle north of breakeven at $195.44 (strike price plus the VWAP) by this Friday's close, when these front-month options expire. Since V is currently perched at $189.49, it would take a rise of 3.1% for the call buyers to begin profiting.
At last check, the delta for this option was docked at 0.11, implying it has just over a 1-in-10 chance of finishing in the money by week's end. However, should the stock remain south of $195 during the time frame, the most Monday's call buyers risk parting with is the initial cash outlay. What's more, V's Schaeffer's Volatility Index (SVI) of 21% ranks lower than all but 32% of similar readings taken during the past 12 months, suggesting the equity's near-term options are relatively inexpensive at the moment.
In terms of technical performance, Visa Inc (NYSE:V) has advanced about 25% so far this year, and more than 41% during the past 52 weeks. On the charts, the stock's August pullback was contained by its 32-week moving average, which has acted primarily as support since February 2011.
Option Briefs offer a concise look at recent notable trading activity. For more in-depth coverage of securities from an Expectational Analysis®
perspective, please visit our Trading Floor Blog section.