V Analysis

Visa Inc. (V)

Update 2/27/2017: V stair-stepped higher after earnings were published, alternating rises with retracements in a classic movement in the direction of the primary trend.

Shares rose by 7.75 over 25 days, or a +113% annual rate. The options position produced a 40.5% loss on debit for a -592% annual rate.


V publishes earnings on Thursday after the closing bell.

I shall use the MAR series of options, which trades for the last time 43 days hence, on March 17.

Implied volatility stands at 21%, which is 1.8 times the VIX, a measure of the volatility of the S&P 500 index.

V’s IV stands in the 32nd percentile of its annual range and the 64th percentile of its most recent broad movement.

The price used for analysis was $81.85.

Premium: $4.05 MAR iron fly
V   Odds Delta
Long 87.50 87.2% 14
Break-even 84.05
Short 80.00 38.7% 64
Short 80.00 61.2% 36
Break-even 75.95
Long 72.50 91.2% 7

The premium is 55% of the width of the position’s wings.

The risk/reward ratio is 0.8:1.

Decision for My Account

I have opened a position on V as described above. The stock at the time of entry was priced at $81.83.

By Tim Bovee, Portland, Oregon, Feb. 2, 2017

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