This post was written by OptionMonster's Chris McKhann.
Visa is down about 3 percent Monday, and the largest options play of the day is apparently looking for more range-bound trading.
V shares are trading $53.66, having put in higher highs since bottoming on Nov. 21 at $43.54, but the stock not been able to break through its technical resistance level of $60. The stock was at a high of $89.94 back in May and steadily fell through October.
- Visa: Insider Trading
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The options trade of the day so far involves Visa's February 65 calls. One block of 17,579 calls traded for $0.60 against open interest of 7,416, according to OptionMonster's tracking systems. That single calls trade nearly matched the 18,000 full-session average for all contracts in the last 20 days.
These calls were sold, most likely against long stock. The $0.60 premium represents a 1.1 percent return over the next 39 days if the stock remains unchanged. The best-case scenario is for the stock to rise to $65, in which case the total return would be more than 21 percent.
If the stock is above $60 at expiration, the position would be assigned and the stock sold. On the downside, this does not afford much protection, just the 1 percent buffer that the premium provides.
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Rival Credit Card Cos.:
MasterCard
American Express
Discover Financial Services
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Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of OptionMonster.com.
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