Visa Stock Attractive Target for Options Bulls

Visa is trading near a key technical level

Research Dept.
Sep 11, 2018 at 10:59 AM
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Financial services concern Visa Inc (NYSE:V) has been one of the top-performing Dow components of 2018. The stock is up 26% year-to-date, but recently pulled back to key support near its 30-day moving average and the $143 area, which is 13 times its March 2008 initial public offering (IPO) price. V also remains well above its late-July post-earnings closing levels. Against this backdrop, now may be the perfect time for bullish traders to bet on V stock’s next leg higher.

Daily Chart of V With 30MA

 

Despite its technical outperformance, short interest on V has continued to rise. Specifically, since the July 1 reporting period, the credit card stock saw short interest rise 20%. These bears may soon begin to cover, which could take 4.5 days to play out, at V's average daily trading volume.

Looking toward options, Visa stock's Schaeffer's put/call open interest ratio (SOIR) ranks in the 80th percentile of its annual range. This indicates that short-term options players have been more heavily skewed toward puts over calls on V just 20% of the time during the past 12 months.

Finally, the equity's Schaeffer's Volatility Index (SVI) of 17% sits in just the 21st annual percentile, revealing low volatility expectations are being priced into near-term contracts.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this V commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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