Butterfly Strategist Eyes Visa, Inc.

V – Visa, Inc. – A diminutive bullish call butterfly spread on the global payments technology firm indicates one options strategist expects Visa’s shares to rally significantly by December expiration. Shares of the credit card issuer increased 1.00% by 12:55 pm ET to trade at $74.00. The bullish individual purchased 1,000 calls at the December $80 strike at an average premium of $1.41 each, sold 2,000 calls at the December $85 strike for an average premium of $0.56 apiece, and picked up 1,000 calls at the higher December $90 strike at an average premium of $0.26 a-pop. Net premium paid to purchase the call ‘fly amounts to $0.55 per contract. The investor responsible for the transaction is positioned to profit should Visa’s shares surge 8.85% to exceed the effective breakeven price of $80.55 by expiration day in December. Maximum potential profits of $4.45 per contract pad the investor’s wallet if the price of the underlying shares increases 14.865% to settle at $85.00 at expiration. The butterfly spread strategy is a very efficient way to take a bullish stance on Visa, Inc. because potential losses are capped at $0.55 per contract, but potential rewards of $4.45 apiece are more than 8-times greater.

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.

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