This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

MA: Charge Into Earnings

Stocks in this article: MA V

This complimentary article from Options Profits was originally published on January 04 at 8:41am EST. Don't risk missing over 40 options trade ideas every week and exclusive commentary from over 10 experts. Click here for more information.

There are many good reasons to hate credit card companies. These companies charge large fees, take a cut from the retailer which raises prices, etc. They also take a cut from the users, albeit an annual fee or in interest rates and late charges (for the less organized). The rates they charge, in a time where the 30 year is at near historical lows do not seem to have fallen the way a 30 year fixed mortgage has fallen.

It's all of these reasons that people hate the credit card firms...and I love them. They are some of the most efficient churners of money out there (if not the most efficient). The only things that seem to really affect their earnings growth are:

1. A slow down in the consumer

2. Regulation

The good news, in the US we continue to spend and have children (which increases the companies base of users). The companies are expanding all over the world into new markets and financial instruments (how anyone would pay $4.95 for a $100 dollar Visa Gift card is beyond me, just give the bloke a C-Note and spend the $5 on a something special for the lady).

This Christmas was a better than expected. It also likely represented the least amount of cash ever used. I think the credit card companies are going to surprise already incredibly loft expectations. To make matters better, volatility on the options of Visa (V) and MasterCard (MA) are somewhat muted.

Before we get into the options trade, let's review the T3/OP video with JIll and Scott as they walk us through the fundamental and technical case for the stock:

As Jill pointed out, MA reports February 2. Ahead of the print, I would like to set up a trade that is currently long vega, but gets short vega. Let's set up a bullish butterfly that we can ride ahead of earnings, or even into earnings.

Trade: with MA trading $356.25, buy to open 1 MA February 380 call for $7.20, sell to open 2 MA February 400 calls at $2.85, and buy to open 1 MA February 420 call for $1.05.

OptionsProfits can be followed on Twitter at twitter.com/OptionsProfits.

Mark can be followed on Twitter at twitter.com/OptionPit.

T3Live can be followed on Twitter at
twitter.com/_t3Live_

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,416.85 +225.48 1.31%
S&P 500 2,021.25 +19.09 0.95%
NASDAQ 4,683.4070 +45.4130 0.98%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters