MasterCard (MA) ripped higher off the open today again. The stock is up over $3.00 since yesterday’s open. Traders are getting behind the move bidding the stock up $0.66 overnight and placing bigger bets in the options market in this morning’s session. One trade came across the tape for $81,000 worth of options expiring next Friday. This is not an earnings play because MasterCard is scheduled to announce earnings at the end of the month. Buying this kind of short-term premium is a very bullish sign because time will eat away at the value of these calls unless MasterCard trades above $80.63 by next Friday’s close.
The trader is predicting the stock will get bid up to $80.00 in little over a week which is very possible given the recent volatility in the name which is only making the options more valuable. This move was the beginning of a trend reversal in which MA finally broke through the top of the cloud. The forward looking portion of the Ichimoku cloud chart is providing support around $76 but the stock is trading well above all support levels right now and wants to push higher. MasterCard is down over 7% YTD, but based on this activity, investors who get long now could see big gains in the second half.
The Trade
Buy 7/25 Weekly 80 Calls for $0.57
Breakeven: $80.57
The Greeks
Delta: Long
Gamma: Long
Theta: Short
Vega: Long