Visa Inc. (V) Option Traders Gamble On a Pullback

Visa Inc (NYSE:V) may reassess its sponsorship of FIFA following recent bribery allegations

May 28, 2015 at 1:20 PM
facebook twitter linkedin


A number of major FIFA sponsors have expressed disappointment with the organization in the wake of the recent bribery scandal and subsequent arrests. Visa Inc (NYSE:V) is one of the companies, saying it is expecting "swift and immediate steps" from FIFA, otherwise it will re-evaluate its support. Following the reports (and amid a broad-market decline), V has shed 0.5% to trade at $69.14 -- extending its recent retreat from record highs -- a move that option traders have been anticipating.

In fact, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), V's 10-day put/call volume ratio of 1.18 ranks in the 83rd percentile of its annual range. In other words, puts have been bought to open over calls at a faster-than-usual clip in recent weeks.

Outside of the options pits, sentiment toward V is more mixed. Among the brokerage bunch, for example, 19 of 24 analysts maintain a "buy" or better rating, with not a single "sell" to be found. Meanwhile, the average 12-month price target of $74.40 represents a slim 7.6% premium to current trading levels -- but sits in territory yet to be charted.  Elsewhere, less than 3% of the stock's float is sold short, yet at V's average daily pace of trading, it would take more than a week to cover these shorted shares.

Technically speaking, Visa Inc (NYSE:V) has been making a series of higher highs in 2015, resulting in a year-to-date gain of 5.5%. What's more, the shares topped out at $70.69 -- their loftiest perch to date -- on May 15. As such, it's possible some of the recent put buying -- particularly at out-of-the-money strikes -- is a result of shareholders protecting paper profits against a pullback.
 

Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

 
Schaeffer's Daily Bulletin Offer
 


 


 
Special Offers from Schaeffer's Trading Partners