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Volatility Alert on Visa

With all the gappy, super correlated, euro driven mess of a market, we've seen one area stay pretty resolute:

Credit Cards.

Specifically, $V and $MA. Now the former really hasn't seen a decent breakout, while Mastercard had a sloppy breakout over the past few months.

$V is worth a look here because of both technical and volatility conditions.

Technicals

After a few attempts to break above $95, it finally did at the beginning of the month... only to chop around for another few weeks. The chart is one of the healthiest currently available in equities, and if the market actually cooperates, we could see this into triple digits soon.

Vol

But this is what really interests me--- a chart of the 30-day Implied Volatility:

The demand for premium in $V options has come back down to levels not seen since the beginning of the year.

Now there is some seasonality going on-- the next 30 days could be a quiet period as we head into the holidays. But after that, we should expect premiums to be bid up again as we head into earnings season.

This is one of those cases where from a risk/reward perspective, it does make sense to be a net option buyer. The premiums are cheap enough where the cost of insuring your position is well worth the buy.

by Steven Place

Steven Place is the founder and head trader at investingwithoptions.com/