Playing the Visa Earnings Trend

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July 24 (Bloomberg) -- Dominic Chu reports on the latest markets news on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Let check in with dom chu.

You can see overall with the u.s. equity indices, basically what we see is a little movement to the downside.

Down two points grade what we see with the dow jones, down 11 points.

The nasdaq up on the news of apple's better earnings report.

Take a look -- we want to highlight this hour -- electronic arts is there a five- year high after a growth in regular videogame sales -- and of course we have to talk about dell, the latest news there.

Dell's special midi seeking $14 a share from michael dell and silverlake management.

This comes after dell and silverlake had raised their offer by $.10 to $13 and $.75 a share.

We will continue to monitor those sales.

An other name we will be watching is visa.

The company said to be be reporting earnings after the bell.

What trends are we seeing in the options market?

Let talk to -- let's talk to our bloomberg analyst specialist.

Visa is a great company to look at, not only because we carry when other cards in our wallet, but it tells us about the spending spending picture in america.

Visa is an interesting stock from an options perspective.

I took a look at visa.

They have a traffic track record.

Their earnings have constantly been higher than expected.

Ever since 2008, when i went public, constantly showing positive earnings.

I took a look at their earnings history and what we see there is a one day in five move of about 3%. that -- you can actually look at the options market and based on the way puts and calls are trading, you can estimate what traders think the move will be.

That is exactly what happened.

With the translation to that side, we took a look into the call options.

Anticipating it will be a positive earnings, the one .90 strike is little expensive.

The 195-200 is a little cheaper.

We did see an open interest for the 200 contract, maybe suggesting covert options being written.

That means if there is call option activity, buying a call option is a bullish indicator.

Based on the amount of volume we are seeing, it's not necessarily all just buying.

It could be other people selling call options to hedge a position or to cover call strategies.

In the environment we are in, we have a very low volume environment trade the fix is at record lows.

So given that anticipated move in visa, trying to figure out whether it's going to move that much, a lot of people instead of doing speculation are taking hedging strategy.

A popular one is like the color , going and helping them protect themselves from the downside volatility.

But knowing people are still bullish on the sad going to come out with positive earnings.

Thank you so much for bringing us that update.

We will be back in half an hour with more.

This text has been automatically generated. It may not be 100% accurate.


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