Visa (V, news, chart, volatility) June 50 puts and June 55 calls both saw increases in open interest of more than 7,500 contracts. Most of the volume happened at 12:52 ET Thursday when a block of 7,250 June 50 puts traded on the offer for $8.55 a contract and two blocks totaling 7,250 (5,800 and 1,450) June 55 calls traded bidside for $7.72 and $7.71 a contract. A block of 690K Visa shares also traded at 12:52. The shares traded for $51.60. It appears to be a collar, where the investor wants to take ownership of the shares, but wants to downside protection. The short calls will limit the upside. The cost basis of the position is about $52.45 with a possible gain of 4.9 percent (plus dividends, excluding commissions) if Visa moves up to $55.00 or more by June options expiration.
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Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.