Bulls Buying Call Options Amid Visa Rally

V – Visa, Inc. – Shares of the global payments technology company are up 0.75% to $77.76 just before 1:40 pm (ET), but earlier in the session rallied as much as 2.5% to an intraday high of $79.13. The bullish movement in the price of the underlying shares inspired near-term optimists to take action. Investors purchased approximately 4,400 calls at the June $80 strike for an average premium of $0.33 apiece. Call buyers at this strike price lose the entire premium paid for the calls if they land out-of-the-money tomorrow. But, investors long the calls are poised to profit if shares of the credit card company rally through the average breakeven price of $80.33 ahead of June expiration. Bullish individuals populated the July $80 strike where 1,200 call options were purchased at an average premium of $2.37 apiece. Options traders long the July $80 strike calls make money if, by July expiration, shares increase 5.9% over the current price of $77.76 to exceed the effective breakeven point at $82.37. Finally, uber-bulls bought roughly 1,700 calls at the higher July $85 strike for an average premium of $0.84 a-pop. Higher-strike call coveters profit only if Visa’s shares surge 10.4% to trade above the breakeven price of $85.84 by expiration day next month.

About Andrew Wilkinson 1023 Articles

Affiliation: Interactive Brokers

Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.

Interactive Brokers: Interactive Brokers offers direct market access to around 80 electronic global markets from a single account. Successful traders and investors understand that superior technology and lower trading costs can result in greater returns. For 32 years we have been building direct access trading technology that delivers real advantages to professionals worldwide. With consolidated equity capital of US $4.4 billion, IB and its affiliates exceed 1,000,000 trades per day. In addition, our prudent and conservative risk policies make Interactive Brokers a safe haven for your money. Discover some of the reasons why IB, the largest independent US broker/dealer, is the professional traders' and investors' choice.

Visit: Interactive Brokers

Be the first to comment

Leave a Reply

Your email address will not be published.