Credit card provider Visa (V) has started 2025 off strong, gaining nearly 7%. One trader sees shares building on that gain in the weeks ahead.
That’s based on the February $355 calls. With 21 days until expiration, 12,248 contracts traded compared to a prior open interest of 163, for a 75-fold rise in volume on the trade. The buyer of the calls paid $1.55 to make the bullish bet.
Visa shares recently hit a new 52-week high, topping $336. Shares would need to rally another $19, or 5.6%, for the option to move in-the-money.
Visa continues to benefit from being the leader in an oligopoly industry. Revenues and earnings both increased about 12% last year.
More impressively, Visa managed to earn a 55% profit margin thanks to the strength of its credit card network. That does leave shares trading at about 30 times earnings, a bit pricey, but Visa is the industry leader in a small industry.
Action to take: Momentum investors may like shares here, given the recent strength in shares. Visa is also company worth buying during bear markets.
Visa currently pays a 0.7% dividend, and has a history of increasing that payout over time.
With shares trending higher, the February $355 calls, while aggressive, could see high double-digit returns in the weeks ahead. Traders should look to take a quick profit before expiration.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.
