Visa's earnings are more than a week away, but traders are already positioning for good news.
Almost 35,000 options traded in the name yesterday, compared with a daily average of fewer than 6,000 contracts. Total calls outnumbered puts by almost 2 to 1.
The most active strike by far was the May 120 calls, which saw more than 11,000 contracts trade in a strong buying pattern. The largest block priced for $2.55, and they ended the session at $2.70 to $2.75, according to the Heat Seeker.
Those long calls lock in the price that traders must pay for the credit-card stock. The contracts will leverage a move to the upside but will expire worthless if the stock fails to rally. (See our Education section)
V closed at $118.10 yesterday, down 2.4 percent. It got taken to the woodshed earlier and was down at nearly 3 percent at one point during the session.
The company is scheduled to report quarterly earnings on Wednesday, May 2. Rival American Express recently released first-quarter results that exceeded expectations on strong spending by cardholders. In addtion, cuts to rewards and promotion costs kept expenses in check.
Disclosure: I own V calls.
(A version of this post appeared on InsideOptions Pro yesterday.)
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