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VISA  
About The Company
Market Capitalization $58.6B
Revenue (FYR) $6.7B
EPS $1.79
P/E Ratio 38.6x
Shares Outstanding 846.5 M
Avg. Daily Share Volume (Last 10 Days) 6.4 M
Dividend Yield 0.61%

Visa Inc is a profitable Consumer Financial Services company that trades on the NYSE. It operates a retail electronic payments network. The Company facilitates global commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses and government entities. Its primary customers are financial institutions, for which it provides product platforms encompassing consumer credit, debit, prepaid and commercial payments. VisaNet, its centralized, global processing platform, enables the Company to provide financial institutions and merchants with a range of product platforms, transaction processing and related value-added services. The Company owns a family of payment brands, including Visa, Visa Electron, PLUS and Interlink, which it licenses to its customers for use in their payment programs. It manages and promotes its brands through advertising, promotional and sponsorship initiatives, and by card usage and merchant acceptance.

In my opinion, VISA is a great company for covered calls and naked puts. I originally purchased 300 shares when the stock first came to market in 2007. I was exercised at $70.00 on the stock in summer 2008. For the rest of the year I did naked puts on the stock. I believe this stock is undervalued but nevertheless, it trades in a range making naked put and covered call writing viable. I do believe that over time this stock will advance to over $100.00, but that could take many years or may never happen. I have no idea where the stock is heading, but I do like the premiums and volatility of this stock. As of August 2009 it pays a quarterly dividend of .105 cents. I am not as interested in owning the stock. I am interest in generating income by selling naked puts.

 

 

 
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Nothing presented is financial advice, trading advice or recommendations. Everything presented is the author's ideas only. The author accepts no liability for its use including errors and omissions. You alone are solely responsible for your own investing and trading. There are considerable risks involved in implementing any investment strategies and losses can be large. Trade at your own risk.

 
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  VISA  (V) - 2011
ONGOING EVALUATION & TRADE
The current strategy is selling naked puts until I either accept assignment OR get assigned shares. Then I will turn to covered calls. Should the stock fall too low  making covered call selling impractical I will add to my stock position through selling naked puts to lower my overall cost.
VISA TRADES BY YEARS
VIEW VISA-2011 TRADES
VIEW VISA-2010 TRADES
VIEW VISA-2009 TRADES
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Should you find my strategy and ongoing evaluation of this trade of value I hope you will consider a tip for the time I spend detailing out this trade. I have set up a Paypal account for those who would like to donate. Thank you in advance. Remember, nothing on my site is financial advice. They are just my ideas and opinions. Investing is risky and losses can be large. Trade at your own risk. Read the terms of use
YEAR 1: 2009 - Trade Commenced Aug 3 2009
Goal for 2009: 5% (5 months)
Strategy: Sell Naked Puts Until Assigned
 
Capital In Use At End Of 2009 62,000.00
Income Earned in 2009 (5 months) 4015.00
Return On Capital in 2009 (5 months) 6.4%
   
YEAR 2: 2010
Goal for 2010: 12%
Strategy: Sell Naked Puts Until Assigned
 
Capital In Use At End Of 2010 86,250.00
Income Earned in 2010 12,090.00
Return On Capital For 2010 14%
   
YEAR 3: 2011
Goal for 2011: 12%
Strategy: Sell Naked Puts Until Assigned
 
Capital Currently In Use 197,548.50
Income Earned in 2011 18096.00
TOTAL INCOME EARNED TO DATE 34201.00
Total Of My Own Capital Required 163347.50
Number Of Shares if assigned 2200
Share Price Valuation
(Total Capital Required/Number of shares)
74.25
YEAR - 3:  2011
TRADE COMMENCED Aug 3 2009
GOAL FOR 2011: 12%

ONGOING STRATEGY - SELLING NAKED PUTS UNTIL ASSIGNED

* ACTIVE TRADES ARE HIGHLIGHTED IN YELLOW

Carry Forward from 2010 - $16105.50

Jan 3 11 70.00 STO 2 NP FEB $62.50 @ .65 1.0     9.50     120.50 16226.00
Jan 19 11 69.26 BTC 5 NP JAN $65 @ .04 (0.01)     13.25     (33.25) 16192.75
Jan 19 11 69.26 STO 5 NP FEB $65.00 @ .85 1.3     13.25     411.75 16604.50
JAN 19 2011: A steady decline culminating into lots of selling today as the debit transaction fees are back in the news again. The stock could test the $66.50 range so I will stay at the $65.00 range and start by selling just 5 naked puts at $65.00. I closed my Jan 65 naked puts just to be safe. At 4 cents it's not worth holding on as I want to take advantage of today's 3% decline in the stock and stay at that $65.00 level.

Jan 20 11 67.80 STO 5 Naked Puts Feb 65 @ 1.20 1.8%     13.25     586.75 17191.25
Feb 18 11 $75.83 Expiry - 5 Feb $62.50 / 10 Feb $65.00 naked puts expired                
Feb 22 11 73.20 STO 5 Naked Puts Apr 70 @ 1.82 2.4%     13.25     896.75 18088.00
Feb 22 11 73.20 STO 5 Naked Puts Apr 67.50 @ 1.19 1.7%     13.25     581.75 18669.75
Feb 22 2011: Back in December the stock broke it's uptrend with a strong collapse that saw the stock plummet to a low of $66.59. The stock then quickly climbed back up to its support zone of around $68.50 to $69.00. There would appear to be strong support in that range. Looking back throughout the past 12 months, the chart continues to show good support in that valuation. Therefore the "sweet spot" for me as I want to eventually own shares, is at the $70.00 level. This should put my puts in and out of the stock at various times over the next few cycles. This means very good premiums. Meanwhile to augment that position I will continue to sell the $67.50 naked put as it is below support and I have a good chance of it always expiring out of the money.

You can see on the chart below that the latest run up ended on Friday with Options Expiry. It is obvious since the stock took a run to $77.08 and then sold off to close down near the lows of the day. This normally signals that more selling is coming into the stock. The stock probably has a good chance to test back to the $72.00 to even the $70.00 range. At this level I would expect traders to load up on the stock and then push it back up to $75.00 and then they will probably start to sell again.

Today I sold 5 naked puts for Apr $70 and 5 for Apr $67.50. This leaves me with 5 contracts that I can place should I see the stock take a larger tumble then I would expect affording me the opportunity to sell additional naked puts below $67.50. Meanwhile I am still holding my March $70.00 naked puts which I sold for $6.00. I will hold a little longer before considering whether to buy them back early or not. If I didn't want to own shares I would definitely be buying them back with such a large profit already made in the puts. At the same time if I did not want the shares I would always be selling below the $68.00 level on weakness like we saw today. I would expect the weakness to continue for a few days, as traders will want the stock to remain depressed as they load up on it before pushing it higher.

Mar 18 11 71.42 Expiry 5 Naked Puts Mar 70 expired               18669.75
Apr 15 2011: My April naked puts all expired. Time to look back at the past year on Visa. $70 marks a lot of support. If I sell the May $72.50 which is just above support, for 1.10 this returns 1.5%. Since that will bring in 1.5% I will wait until next week to see if the stock falls a bit further and then sell the 70 strike with my remaining 5 contracts..

Apr 15 11 76.47 Expiry 5 Naked Puts Apr 70 expired
          5 Naked Puts Apr 67.50 expired
              18669.75
Apr 15 11 76.25 STO 5 Naked Puts May $72.50 @ 1.10 1.48%     13.25   36263.25 536.75 19206.50
May 20 11 78.23 May Options Expiry 5 Naked Puts May $72.50 expired                
MAY 23 2011: I have been waiting for a chance to sell puts again on Visa and today with the pullback I was able to sell 8 naked puts on Visa at the $72.50 strike for better than 1% return. The $70 zone has a lot of support in the stock. I feel quite comfortable selling the stock at $72.50 and I was actually quite surprised when this opportunity presented such good premiums.

May 23 11 76.77 STO 8 Naked Puts JUN $72.50 @ .79 1.06%     17.00   58017.00 615.00 19821.50
JUNE 8 2011: VISA STOCK was perfect today for selling a short term put. I jumped on the opportunity and sold the 18JUN11 $72.50 Put for .82. Visa has been weak for the past few sessions, along with most of the market. However VISA is a special case as congress continues to try to decide what to do about debit fees. Today's trade is decent as the stock pulled back to almost where it was on May 23. Selling another 5 put contracts at the $70.00 strike is an easy choice for 7 more trading sessions before expiry.

Jun 8 11 76.90 Sold 5 Naked Puts 18JUN11 $72.50 @ .82 1.1%     13.25   36263.25 396.75 20218.25
Jun 17 11 74.43 Expiry: 13 Naked Puts Jun $72.50 expired                
JUNE 17 2011: Visa is down 8% from its recent high. The technicals look poor on VISA which leads me to think the stock could easily fall lower. The market turmoil has created higher put premiums, but I do not want to be assigned at a high strike only to watch the stock collapse, leaving me deep in the money. Here is the strategy I use to determine what put strikes to sell in an effort to minimize the chance of assignment while at the same time earning enough put premium to warrant risking my capital during a period of market uncertainty. It is important to get the risk I am willing to accept, balanced against the reward I want to earn. To read how I came up with $65 as my put strike to sell, you can read about the strategy I use, here.
Jun 17 11 74.40 Sold 5 Naked Puts Sep $65 @ 1.50 2.3%     13.25   32513.25 736.75 20955.00
JUNE 24 2011: VISA STOCK continued weak with more selling today. I have been watching the weeklies on VISA and today I had to jump in and sell some 1JUL11 $67.50. Even with the weakness in the stock I feel pretty comfortable at $67.50 for 1 week. I believe the stock while under pressure has a lot of support at $65.00. Therefore if assigned at $67.50 I will sell covered calls until the stock recovers.

VISA Stock - 1 Year Chart

Jun 24 11 74.00 Sold 5 Naked Puts 1JUL11 $67.50 @ .50 0.70%     13.25   33,763.25 236.75 21191.75
Jun 24 11 73.90 Sold 5 Naked Puts 1JUL11 $67.50 @ .53 0.74%     13.25   33,763.25 251.75 21443.50
Jun 24 11 73.77 Sold 5 Naked Puts 1JUL11 $67.50 @ .60 0.84%     13.25   33,763.25 286.75 21730.25
Jul 1 11 87.97 Expiry: 15 Naked Puts Jul $67.50 expired                
Jul 8 11 88.50 Bought To Close 5 Naked Puts Sep 65 @ .20 (0.30)     13.25     (113.25) 21617.00
JUL 25 2011: VISA STOCK roared up after the government pretty well backtracked on its decision to change the debit fees companies like VISA levy. The stock ran up to a little over $90.00 in just the last few weeks. On Wednesday of this week VISA will announce its earnings. Everyone is expecting terrific earnings, including myself. I sold the weeklies for today and I also sold out into August.
Jul 25 11 88.35 Sold 10 Puts 20AUG11 $82.50 @ .92 1.09     19.50   82519.50 900.50 22517.50
Jul 25 11 88.30 Sold 5 Puts 29JUL11 $85 @ .40 0.43     13.25   42513.25 186.75 22704.25
JUL 28 2011: VISA announced excellent earnings yesterday. The stock did not sell off as much as I had anticipated. Therefore in keeping with my strategy of the cautious bull, I closed the 29JUL11 puts 1 day early. There is no reason to risk this capital further when for pennies I can close this trade and release the capital for further investments.
Jul 28 11 87.22 Bought to close 5 PUTS 29JUL11 $85 @ .08 0.13     13.25     (53.25) 22651.00
Jul 29 11 84.21 Sold 5 20AUG11 PUTS $77.50 at .80 1.00     13.25   38763.25 386.75 23037.75
Aug 9 11 78.80 Sold 10 Puts 17SEP11 $70.00 at .75 1.00     19.50   70019.50 730.50 23768.25
Aug 19 11 79.60 Expiry: 10 Puts 20AUG11 $82.50 assigned   1000   20.00 82520.00 82520.00    
Aug 19 11 79.60 Expiry: 5 Puts 20AUG11 $77.50 expired                
Aug 19 11 79.60 Sold 5 Puts 17SEP11 $67.50 @ .72 1.02     13.25   33763.25 346.75 24,115.00
AUG 19 2011: With options expiry today, I had to decide whether or not to accept assignment on 1000 shares of VISA. I had decided back in July that I would take the shares. The other options expired and I took advantage to sell some more put options at $67.50.
Aug 25 11 84.11 Sold 5 Puts 17SEP11 $67.50 @ .45 0.62     13.25   33763.25 211.75 24,326.75
AUG 29 2011: It is obvious that it was the right choice to accept shares in VISA stock rather than buy back my August $82.50 puts and roll down. But how do I decide when to accept shares in a stock versus buying back the puts and rolling down? This article on Visa Stock explains my strategy and how I apply it..
Aug 29 11 87.50 Sold 1000 shares at $87.50 6.00     7.00 -87493.00 0.00 4973.00 29,299.75
Sep 16 11 90.50 Expiry: 10 Puts 17SEP11 $67.50 expired                
Sep 22 11 86.55 Sold 10 Naked Puts 22OCT11 $70 @ .72 1.0     19.50   70019.50 700.50 30,000.25
Oct 3 11 84.35 Sold 5 Naked Puts 22OCT11 $70 @ .63 0.86     13.25   35013.25 301.75 30,302.00
Oct 21 11 93.43 Expiry: 15 Naked Puts Oct $70 expired                
Oct 25 11 90.77 Sold 10 Naked Puts 28Oct11 $82.50 for .28 0.31     19.50   82519.50 260.50 30,562.50
Nov 21 11 89.25 Sold 5 Naked Puts 17DEC11 $75 @ .35 0.43     13.25   37513.25 161.75 30,724.25
Nov 21 11 89.35 Sold 5 Naked Puts 17DEC11 $75 @ .30 0.36     13.25   37513.25 136.75 30,861.00
Nov 25 11 89.00 Sold 10 Naked Puts 21JAN12 $85 @ 2.25 2.6     19.50   85019.50 2230.50 33,091.50
Dec 16 11 97.44 Expiry 10 Naked Puts 17DEC $75 expired                
Dec 16 11 96.80 STO 5 Naked Puts 21JAN12 87.50 @ .58 0.63     19.50   43,763.25 276.75 33,368.25
Dec 28 11 102.00 STO 10 Naked Puts 21JAN12 92.50 @ .55 0.57     19.50   92519.50 530.50 33,898.75
Dec 28 11 102.00 BTC 10 Naked Puts 21JAN11 $85 @ .14 (0.02)     19.50     (159.50) 33739.25
Dec 30 11 101.65 Sold 7 Naked Puts 18FEB12 $87.50 @ .95 0.75     15.75   61265.75 461.75 34201.00
VISA TRADES BY YEARS
VIEW VISA-2011 TRADES
VIEW VISA-2010 TRADES
VIEW VISA-2009 TRADES

 

Disclaimer: There are considerable risks involved in all investment strategies. Trade at your own risk.
Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed or presented are financial advice, trading advice or recommendations. Fullyinformed.com is a private website. Everything presented and discussed are the author's ideas and opinions only.
By using this site, you agree to be bound by its terms of use. The full terms of use can be read here. If you do not agree to the terms of use, do not use this site. The author of fullyinformed.com assumes no liability for topics and ideas discussed, errors and omissions, ads and their content and external links. Any corporate insignia used are registered trademarks of their respective company or corporation and are being used for identification purposes only. All material copyrighted by FullyInformed.com. Reproduction in whole or in part prohibited. Copyright 2008

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