NEW DIRECTIONAL CALL PLAYS
Visa Inc. - V - close: 207.54 change: +4.95
Stop Loss: 199.95
Target(s): to be determined
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings on April 24th
New Positions: Yes, see below
Why We Like It:
Visa is in the financial sector. The company operates a global network of retail electronic payments.
Shares of V have been consistently marching higher over the last three years. Investors have been betting on a long-term trend that's favorable to electronic payments.
Customers are using plastic more and more as people carry less cash and fewer retailers take checks.
Yet the upward momentum in V stalled late last year. Both MasterCard (MA) and Visa negotiated a $6 billion settlement with retailers over a price fixing scandal in late 2013. Yet several major retailers backed out of the deal. Wal-Mart was one of them and recently announced a $5 billion lawsuit against Visa claiming the company charged unreasonably high fees when the retailer's customers paid with a card.
Visa definitely has a fight ahead of them. Ugly headlines could be a risk for the bulls. However, the long-term trends favor Visa's business. More importantly, on a short-term basis, shares of Visa are bouncing from significant support.
The stock is rebounding from a test of its long-term trend line of higher lows (see weekly chart). It's not a coincidence that V is also bouncing from technical support at its simple 200-dma.
We are suggesting buying calls at the opening bell tomorrow morning. We're not setting an bullish target just yet but plan on exiting prior to V's earnings report on April 24th. You could argue that V has potential resistance near the $215.00 and $220.00 levels so watch these areas carefully.
*Buy calls tomorrow morning*
- Suggested Positions -
Buy the May $210 call (V1417E210) current ask $5.60
Entry on April -- at $---.--
Average Daily Volume = 3.8 million
Listed on April 09, 2014