$V bulls swipe again for gains

Visa (V) bulls scored fast gains again today on short-dated upside calls.

On Aug. 19, Market Rebellion’s Unusual Activity Service detected the purchase of 6,000 Weekly $205 calls expiring this Friday, Aug. 28, for $1.25 to $1.58 with shares at $200.33. This was clearly fresh buying, as open interest in the strike was only 3,097 contracts before the activity appeared.

Those calls traded for as much as $4.99 during today’s session, more than three times their purchase prices. The stock rose 3% in the same time period, illustrating how quickly options can far outperform moves in their underlying shares.

It is the second winning trade in the name posted on Market Rebellion in as many sessions.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

V closed higher today by 1.1% at $206.41. The electronic fund transfer company continued its five month advance today after the FDA’s authorization of the use of blood plasma from recovered COVID-19 patients as a treatment.