Visa Inc. (V) 1/29/10 PriceWatch Alert At $77.50 Break Even

Posted: Friday, January 29, 2010 8:10 AM EDT
By: Market Intelligence Center Staff

Visa Inc. (NYSE: V) closed yesterday at $82.65. So far the stock has hit a 52-week low of $45.25 and 52-week high of $89.69. Visa stock has been showing support around 79.78 and resistance in the 85.92 range. Technical indicators for the stock are Bearish and S&P gives V a neutral 3 STAR (out of 5) hold rating. V appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Mar '10 80 covered call for a net debit in the $77.50 area. That is also the break even stock price for this trade. This covered call has a 50 day duration, provides 6.23% downside protection and a 3.23% assigned return rate for a 23.55% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the V Jan '11 35 Call and selling the Mar '10 80 call for a $42.65 debit. The trade has a 50 day life and would provide 6.05% downside protection and a 5.51% assigned return rate for a 40.00% annualized return rate (for comparison purposes only). Visa has a current annual dividend yield of 0.62%. [FBB-Seven Summits Research]