Wednesday, October 7, 2009

Visa and Mastercard--Ready to Rumble!!

Anyone notice the action in Visa (V 70.86) +2.60 and Mastercard (MA 210.90) +10.30 today?

Both of these names have corrected nicely the last two weeks, and now, both are set up to run again.

V and MA are the stocks that have the juice for traders and option junkies. V is reporting earnings in three weeks; thus the October calls have very little premium. MA is reporting November 3; but both these stocks are proxies for the psychology of investors.

And investor psychology is improving rapidly.

BAC was upgraded by Wells Fargo today. It was also touted to 30 by another firm. They report earnings next Friday. GOOG reports that Thursday night. A good report by BAC and GOOG, could cause all the financials to gap higher on option expiration, along with the NASDAQ names. This volatility event is not priced in the October options; nor is the current bullish sentiment percolating in the market.

Both of these names are buys, and the October 72.5 calls on V are a great way to play the upside, along with some Nov call options on both V and MA that will reprice on an earnings upside surprise. I like the Nov. MA 240 calls at 2.50, and the Nov. 75 calls on V at 1.80 as volatility plays. If V beats numbers, and they report a week before MA; then you get a dual pump in the MA options.

It's a great risk/reward play on higher prices, improving markets and better consumer psychology.

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