3 Reasons To Buy Visa Stock

Visa stock has been among the best to own in February

Managing Editor
Jan 31, 2018 at 3:17 PM
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Visa Inc (NYSE:V) has stormed into the new year, on track for its seventh straight monthly win. The blue chip financial firm is scheduled to report fourth-quarter earnings after tomorrow's close, and the stock could be on the cusp of a historically bullish month. Below, we will take a closer look at how Visa has been faring on the charts, and how options traders are speculating on the Dow stock.

At last check, Visa stock was up 0.2% to trade at $123.82, and touched a record high of $126.88 on Monday. Visa stock has added 8.6% so far in 2018, and roughly 50% year-over-year -- guided higher by its rising 10-week moving average. Furthermore, the security has been one of the best stocks to own in the month of February over the past 10 years.

The blue-chip name has an encouraging earnings history. V has been higher the day after earnings in five of the last eight quarters --  including a 4.6% gain last February. The shares have averaged a single-session post-earnings swing of 2.4% in either direction, looking back two years. This time around, the options market is pricing in a larger 5.1% move, per at-the-money implied volatility data.

It should also be noted that Visa has a history of rallying after the Super Bowl. Per data from Schaeffer's Senior Quantitative Analyst Rocky White, the equity has averaged a gain of 5.32% the month after the Super Bowl, looking back 10 years.

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In the options pits, this bullish sentiment is prevalent. Visa stock has seen call buying more than double put buying over the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).

Digging deeper, the March 125 call is home to peak front-month open interest during this time frame. The majority of the activity at this strike is of the buy-to-open variety, indicating options traders are banking on another strong February from Visa stock in 2018.

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