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VISA Earnings

DATE July 22, 2011

STOCK/INDEX V

STOCK PRICE 89.30

NEXT ESTIMATED EARNINGS July 27, 2011

OPTION PLAY Risk Reversal

SELL AUG 85 Puts @ $1.30

BUY AUG 92.5 Calls @ $1.30

NET COST 0

MAX PROFIT Unlimited after $92.5

MAX LOSS Unlimited under $85




TRADE COMMENTARY:

Visa is due to announce earnings on July 27, and as you know the stock is recently had a decent run and had some favorable court rulings that have helped every credit card stock. Credit card companies have tightened up their business as far as who they offer credit cards to…they are being more selective. One has to remember that they are never really truly on the hook for any of the money spent.

Expected $1.23, Previous $1.23

It completed a $1 billion stock buyback program earlier this month. The Fed’s limit that was imposed last month on VISA seems to not be as a big of a deal as we all thought it would be, but nevertheless VISA has decreased its own expectations for the quarter because of it. Furthermore, prior favorable ruling also helped out credit card companies giving them broader fee capabilities. Challenge for credit-card companies is to show growth in their card-loans books. American Express just recently posted a 27% growth in profits this quarter…which makes us optimistic about visa, being that it is the biggest transaction card in the world. 52 week high : 90.53, currently at 89.20

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