Trade Alert - (V) February 16, 2024 - EXPIRATION AT MAX PROFIT
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - (V) – EXPIRATION AT MAX PROFIT
EXPIRATION of the Visa (V) February 2024 $240-$250 in-the-money vertical Bull Call debit spread at $10.00
Closing Trade
2-16-2024
expiration date: February 16, 2024
Number of Contracts = 12 contracts
With this trade, we really nailed the ballistic melt-up in Visa shares since January 10.
Just to be clear, this position does not expire until after the close on Friday, February 16. I’m sending this expiration alert out now so I don’t overwhelm you with too many expirations at max profit in one day.
As a result, you get to take home $1,440, or 13.64% in 26 trading days. Well done and on to the next trade.
Visa is the world’s largest credit card company. It is highly sensitive to any recovery in the economy, which feeds straight into more fee income.
You don’t have to do anything with this expiration.
Your broker will automatically use your long position to cover your short position, canceling out the total holdings.
The entire profit will be credited to your account on Monday morning February 19 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
The flight of money right now is from small, undercapitalized, and questionable to large, overcapitalized, and rock solid.
To learn more about the company, please visit their website at https://usa.visa.com
Visa (V) has ample cash flow, carries no net debt, and with high inflation is a guaranteed double-digit sales and earnings compounder.
It clears a staggering $14.8 trillion worth of transactions a year. With $32.7 billion in net revenues in 2023 and $17.27 billion in net income, it has a technology-like 55% profit margin. Visa is also an aggressive buyer of its own shares, about 3% a year. That’s because it trades at a discount to other credit card processors, like Master Card (MA) and American Express (AXP).
The only negative for Visa is that it gets 55% of its earnings from aboard, which have been shrunken by the strong dollar. That is about to reverse.
It turns out that digital finance never made a dent in Visa’s prospects, as the dreadful performance of PayPal (PYPL) and Square (SQ) shares amply demonstrate.
This was a bet that Visa would not fall below $250 by the February 16 option expiration in 6 trading days.
Here is the specific accounting you need to close out this position:
EXPIRATION of 12 February 2024 (V) $240 calls at………….………$36.43
EXPIRATION of short 12 February 2024 (V) $250 calls at…………$26.43
Net Cost:…………………………...……………….............................….....$10.00
Profit: $10.00 - $8.80 = $1.20
(12 X 100 X $1.20) = $1,440, or 13.64% in 6 trading days.
