Blue-chip credit card stock Visa (V) has been stuck between the $340 and $355 level since August, after facing rejection at the $360 level twice in July. This rangebound price action follows the security’s June 11, all-time high of $375.51, which contributed to its 18.4% year-over-year lead. Despite the short-term consolidation, the shares are now flashing a historically bullish long-term signal that may help V break out of this range.
Digging deeper, Visa stock is trading within striking distance of its 12-month moving average, after spending at least 80% of the last 20 monthly closes above this trendline. According to Schaeffer’s Senior Quantitative Analyst Rocky White, this has happened 18 times over the last 20 years, after which the equity was higher one month later 83% of the time, averaging an 8.2% pop.
A move of similar magnitude from the stock’s current perch would put it above $368. Longer-term returns are even better, with V averaging a 19.3% gain after three months in 89% of circumstances. This means the equity could see new records around $406.
An unwinding of pessimism in the options pits could keep the tailwinds blowing. Visa stock’s 50-day put/call volume ratio of 1.11 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 71% of readings from the past year. Echoing this, V’s Schaeffer’s put/call open interest ratio (SOIR) of 1.06, sits in the 83rd percentile of annual readings, meaning short-term options traders have rarely been more put biased in the last 12 months.
Now looks like an opportune time to weigh in on V’s next moves with options. This is per its Schaeffer’s Volatility Index (SVI) of 21% ranks in the low 12th percentile of its annual range, meaning options traders are pricing in low volatility expectations.