Visa Inc. (V) 2/1/10 PriceWatch Alert With $75.08 Break Even

Posted: Monday, February 01, 2010 8:20 AM EDT
By: Market Intelligence Center Staff

Visa Inc. (NYSE: V) closed yesterday at $82.03. So far the stock has hit a 52-week low of $46.86 and 52-week high of $89.69. Visa stock has been showing support around 79.85 and resistance in the 86.07 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 Jun '10 80 covered call for a net debit in the $75.08 area. That is also the break even stock price for this trade. This covered call has a 138 day duration, provides 8.47% downside protection and a 6.55% assigned return rate for a 17.33% 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 55 Call and selling the Jun '10 80 call for a $21.35 debit. The trade has a 138 day life and would provide 6.92% downside protection and a 17.10% assigned return rate for a 45.00% annualized return rate (for comparison purposes only). Visa has a current annual dividend yield of 0.60%. [ABR-Seven Summits Research]