Bullish options traders bet on big payout when Visa reports earnings


The busiest week of earnings season rolls on when Visa reports after the bell Tuesday, and options traders are betting on a big payoff when the payment giant’s results cross the wire. 

The Dow component’s shares are up nearly 6% on the year thanks to a 35% bounce off the March lows, paving the way for what traders believe will be an earnings report that surprises to the upside.

“We saw calls out-trade puts by [a ratio of] about 3-to-1 today on above average volume, and right now, the options market is implying a move of about $6 higher or lower, 3% of the stock price,” Optimize Advisors CIO Michael Khouw said Monday on “Fast Money.”

That 3% move would be right in line with Visa’s average post-earnings action over the last eight quarters, but a 3% jump from here would put the stock within striking distance of its all-time highs from earlier this year.

“The weekly options that saw the most opening activity were the 197.5-strike calls,” said Khouw. “Buyers of those were paying about $2.70 a contract. A lot of this was retail traders, it would seem, because the average trade size was about 4 contracts.”

Those contracts break even at an underlying stock price of about $200.20, which is only about 1.5% higher than where Visa closed Monday’s session, about half of the stock’s implied move.

Visa was trading slightly higher in Tuesday’s session. 

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