Trader bets $4.5 million on 50% rally for Dow component Visa

One trader is charging up a storm that Dow component Visa could see a rip-roaring rally over the next 18 months.

In the sizable trade that had the options market buzzing Thursday, one trader purchased 50,000 of the Visa January 2018 110/120 call spreads for 89 cents each. Since each call option accounts for 100 shares of stock, this is a $4.5 million bet that the credit-card company will rise to $120 a share by January 2018, or as much as 50 percent from where the stock is currently trading.

Shares of Visa are up 5 percent in 2016, far outperforming rivals MasterCard and American Express, which respectively are flat and down 6 percent during the period.

"This trade is unusual because the stock is just over $80 and the strike they are buying is more than 35 percent out of the money and the higher one is about 50 percent out of the money," Optimize Advisors president and co-founder Mike Khouw said Wednesday on CNBC's "Fast Money." "This is obviously a big bullish bet on the leader in the payment space. I don't know if this one is going to pan out, but we will have a year and a half to see," he added.

Visa has caught the eye of Wall Street firms lately. Earlier this week JPMorgan resumed coverage of the stock, citing relative outperformance of other payment networks.

According to FactSet, of the 30 analysts who cover Visa, the average price target is $88.62 with an overweight rating.

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