With V well below its 52-week high and a business model that carries little risk towards the financials (when compared to a Citibank of a BofA), its hard not to look at this Company a bit more curiously. Remember, Visa does not issue credit/ That is the job of the bank or institution.
Now back to the Options! Today, the Call Options are looking very attractive behind the Bernstein downgrades. I believe the market is clearly over reacting, which in turn, has created a potentially profitable opportunity for us here :). I'm particularly interested in the Dec 2010 $75 strike and Jan 2011 $80 strikes. Both strikes are trading close to 50% and 60% respectively below their trading prices on Friday.
For those of you that are interested in spreads, selling the next higher strike in relation to the one purchased earlier would provide the best bang for the buck. The Jan 2011 75/80 call spread can be purchased for just $0.83 for a possible $5 of upside if it were to close at or above $80/share at Jan 2011 expiration.
I would even go one step further and also sell a Jan 2011 $50 put currently giving us $1.07! Not only would this make our Call spread FREE, it would give us a $0.24 credit :).
So let's summarize this below:
The Trade:
Buy: Jan 2011 $75 Call
Sell: Jan 2011 $80 Call
Sell: Jan 2011 $50 Put
Price of Spread: $(0.24) CREDIT
Upside Potential: $5!!!!!!!!!!!
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