The $4.5 Million Bullish Bet on Visa Inc (V)

Visa Inc (NYSE:V) is within striking distance of a new record high

by Kirra Fedyszyn

Published on Jun 8, 2016 at 3:47 PM

Visa Inc (NYSE:V) is climbing the charts today, last seen up 1.3% at $81.68 -- just pennies below its April 19 all-time high of $81.73. This just echoes the equity's longer-term trajectory, with V stock up 20% year-over-year, atop support from its 10-day moving average. Today's price action has V's options pits heating up, with call volume at a 52-week peak. What's more, a significant portion of this activity is coming from one bold options trader, who appears to see much higher highs in V's future.

According to Trade-Alert, a LEAPS player this morning initiated a long call spread in V's January 2018 series by purchasing 50,000 110-strike calls, while simultaneously selling the same number of 120-strike calls. By opening this spread, the trader is betting the shares of V will rally 36% over the next 18 months.

And this highly bullish bet did not come cheap. Paying $1.35 for the purchased calls and collecting a credit of $0.46 for the calls sold, the trader's net premium paid for the spread comes in at roughly $4.5 million ($0.89 premium paid per pair of contracts x 50,000 contracts x 100 shares per contract).

Meanwhile, there appears to be plenty of option bulls with more immediate gains in mind. The next most active option today is V's weekly 6/10 81-strike call, where new positions are being purchased. Buyers of the weekly call are looking for the stock to extend its rally above the $81 level through the end of the day Friday, when the weekly options expire.

Though calls have been favored over puts on an absolute basis of late, put buyers have been busy in recent weeks. Specifically, the stock's 10-day put/call volume ratio of 0.68 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) of 0.68 sits higher than 77% of the past year's readings.

Outside of the options pits, however, optimism is running high. Short interest accounts for just 2.3% of the stock's total float. And more than three-quarters of analysts currently rate Visa Inc (NYSE:V) a "buy" or better, without a "sell" recommendation in sight.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical  levels, and top economic stories straight to your inbox.

A Schaeffer's exclusive

6 Sectors for Summer

Access your FREE insider report before it's too late!


  
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


Huge New Legal Marijuana Market Has Shortage Crisis
250 million Europeans have access to medical marijuana. There's already a shortage....
Tiffany Stock Drops as Takeover Talks Dissipate
LVMH was to acquire Tiffany & Co in a billion-dollar deal
Coty Stock Glows Up with Possible Kardashian Cosmetics Line
The trendy cosmetics company is in talks with reality TV star Kim Kardashian West over a line of beauty products
The Next Big Player in U.S. MJ Boom
Most pure-play marijuana stocks in the U.S. trade on the Over-the-Counter stock exchange.