Visa Stock Blasted with Bull Notes After Earnings

Options traders are chiming in as well

Deputy Editor
Apr 28, 2021 at 10:19 AM
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The shares of Visa Inc (NYSE:V) are up 1.2% to trade at $232.75 at last check, after the credit card giant reported better-than-expected fiscal second-quarter earnings and revenue. Furthermore, Visa announced a partnership with sector peer PayPal, which will boost financial inclusion across emerging markets, as well as partnership with Airbnb (ABNB). In response, no fewer than 13 analysts raised their price targets, with the highest coming from Evercore ISI to $286 from $245. 

Today's pop put V at a new record high of $236.27 out of the gate today. The shares have won five session in the last six days, and are cruising toward their fifth-straight weekly win. Year-over-year, the equity is up 34.3%.

Analysts are overwhelmingly bullish on Visa stock, with 20 of the 23 in coverage carrying a "buy" or better rating, and the remaining three a tepid "hold." Plus, coming into today, the 12-month consensus price target of $259.03 was already a 12.7% premium to last night's close. 

Sentiment is similar in the options pits, per V's 10-day call/put volume ratio of 3.24 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 85% of all other readings from the past year, indicating a stronger-than-usual penchant for calls. 

Drilling down to today's options activity, options traders are chiming in at full force. So far, 20,000 calls and 6,069 puts have crossed the tape -- five times what is typically seen at this point volume-wise. The August 240 call is the most popular, followed by the weekly 4/30 240-strike call, with new positions being opened at the former. 

That said, speculating on Visa stock's next move with options could be a prudent play. The stock's Schaeffer's Volatility Index (SVI) of 23% stands higher than just 14% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. 

 

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