Bulls Think Visa Is Ready to Charge

By Pete Najarian, co-founder of OptionMonster

NEW YORK -- Visa's ( V) earnings are more than a week away, but traders are already positioning for good news.

Almost 35,000 options traded in the name Monday, compared with a daily average of fewer than 6,000 contracts. Total calls outnumbered puts by almost 2 to 1.

The most active strike by far was the May 120 calls, which saw more than 11,000 contracts trade. The largest block priced for $2.55, and they ended the session at $2.70 to $2.75, according to OptionMonster's real-time tracking systems.

Those calls lock in the price that traders must pay for the credit-card stock. The contracts will leverage a move to the upside but will expire worthless if the stock fails to rally.

Visa closed at $118.10 Monday, down 2.4%. It got taken to the woodshed earlier and was down at nearly 3% at one point during the session.

The company is scheduled to report quarterly earnings on Wednesday, May 2. Rival American Express recently released first-quarter results that exceeded expectations on strong spending by cardholders. In addition, cuts to rewards and promotion costs kept expenses in check.

Najarian owns V calls.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.