Trade of the Day: Visa (V)

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Bulls have found countless ways to escape bears’ claws during the course of the six-year bull market, so you can’t ever count them out. But I’m seeing signs that big companies are struggling to sell their stuff and services, particularly overseas in the weakened Asian and eurozone economies. With earnings under pressure, it’s gut check time. One bearish play that I’m targeting is Visa (V).

The credit behemoth reports earnings today after the close but there’s more to worry about than that. Sometimes VISA is not everywhere you want to be. Sometimes it is peaking and falling over — and taking the entire Dow Jones Industrials Average down with it. Visa topped out at the end of 2014, and, after a brief consolidation around $255–$260, it has begun a descent that will likely take it back toward its 200-day average.

Visa

You could certainly short Visa shares, but there’s a cheaper way to trade its decline.

Buy the V Feb. $245 puts (V150220P00245000) on a pullback to $4.85 limit, good till canceled. The contracts are trading well above that area now, but patience with your entry point should be rewarded.

Visa pulling back to the 30-day average would be just what the doctor ordered to allow short-sellers to reload and fire again.

Jon Markman operates the investment firm Markman Capital Insights. He also offers a daily trading advisory service, Trader’s Advantage, and CounterPoint Options, a service that helps individual traders make steady, consistent profits with volatility-related instruments.


Article printed from InvestorPlace Media, https://investorplace.com/2015/01/trade-day-visa-v-2/.

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