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Short-Term Bears Expect a Brutal Week for Visa


Speculators loaded up on weekly V put options last Friday.

Short-term bears targeted Visa (NYSE:V) last Friday, with the stock's weekly April 26 155-strike put emerging as the day's most active option. A total of 3,284 contracts changed hands here, with roughly two-thirds crossing the tape at the ask price -- indicating that most of the volume was buyer-driven. This weekly put gained 3,222 contracts in open interest over the weekend, confirming the addition of new bearish bets here on Friday.

The volume-weighted average price (VWAP) on that 155-strike put was $0.26, which means option buyers need Visa Inc shares to fall below breakeven at $154.74 (strike price less VWAP) by the end of this week. That would be a considerable slide for V, as the stock settled last Friday at $163.96.

These aren't earnings-related bets, either, as Visa isn't scheduled to report its fiscal second-quarter results until after the market closes next Wednesday, May 1. Instead, it seems Friday's weekly put buyers are simply bracing for V to lose more than 5.6% over the course of this week.

The stock is already on negative ground this morning, with V off 0.5% at $163.13 at 10 a.m. EDT. However, the shares have lately found a foothold in the $160-$162 area, which previously served as resistance during most of the first quarter. This region is also home to the equity's rising 50-day moving average, which hasn't been breached on a daily closing basis since March 21.

This article by Elizabeth Harrow was originally published on Schaeffer's Investment Research.

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