Visa Inc. (V) 11/3/09 PriceWatch Alert Up To 7.37% Downside Protection

Posted: Tuesday, November 03, 2009 8:37 AM EDT

Visa Inc. (NYSE: V) closed yesterday at $77.29. So far the stock has hit a 52-week low of $41.78 and 52-week high of $78.20. Visa stock has been showing support around 74.76 and resistance in the 79.44 range. Technical indicators for the stock are Bullish 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 Jan '10 75 covered call (V AO) for a net debit in the $71.59 area. That is also the break even stock price for this trade. This covered call has a 74 day duration, provides 7.37% downside protection and a 4.76% assigned return rate for a 23.49% 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 40 Call (VSK AH) and selling the Jan '10 75 call (V AO) for a $32.20 debit. The trade has a 74 day life and would provide 6.59% downside protection and an 8.70% assigned return rate for a 43.00% annualized return rate (for comparison purposes only). Visa has a current annual dividend yield of 0.54%. [ATU-Seven Summits Research]

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