‘There’s not much to dislike’ about Dow stock Visa, says trader

Visa has been on a tear this year, up 23 percent and leading the Dow. TradingAnalysis.com founder Todd Gordon is betting on a bigger rally for the stock when it reports earnings next week.

Gordon told CNBC’s “Trading Nation” on Tuesday that “there’s not much to dislike” about the chart of the credit card giant, referring specifically to what he describes as a “beautiful uptrend” for Visa that has been in place since February.

A shorter-term chart of Visa leads Gordon to believe that the stock is currently settling into a fourth Elliott wave, leading him to predict that there will be a fifth and final wave that pushes Visa to $145. At the same time, he also identifies that support is at around $137 given the stock’s current consolidation.

As a result, Gordon wants to sell the July 27 weekly 139-strike put and buy the July 27 weekly 137-strike put for a credit of 79 cents, or $79 total credit. This means that if Visa closes above $139 on July 27 expiration, then Gordon would make the $79 credit on the trade.

However, if Visa were to close below $137 on the expiration date, then Gordon could lose $121. But the stock was already trading at just over $139 on Tuesday, meaning Visa just needs to hold above its current level when the market closes on July 27.

The trade: Gordon is suggesting selling the July 27 weekly 137/139 put spread in V for about $79 credit.

Bottom line: Gordon sees V rallying above $139 on July 27 expiration.

Vote
Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.

Videos

Trades to Watch

Trader Bios

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more

Connect