$V Options Intelligence

## Market Regime & Context (October 24, 2025)

• Fed Policy: The Federal Reserve’s next rate decision is scheduled for October 29, 2025, just five days away. The market is in a “wait-and-see” mode, with recent FOMC meetings indicating a cautious approach—neither aggressively hawkish nor dovish—amid persistent inflation concerns and mixed economic data.
• Economic Data: Upcoming CPI (November 13) and Non-Farm Payrolls (November 7) reports loom, but the immediate focus is on corporate earnings and Fed guidance. The broader market is moderately bullish, with the S&P 500 holding above key moving averages and VIX stable, suggesting low fear and a “risk-on” tone[2].
• Sector Performance: Financials and tech continue to lead, with Visa (V) trading just above its 200-day MA, a bullish technical signal. Related companies (MA, AXP, PYPL) show similar resilience, though none have broken out as sharply as V.
• Macro Risks: No major geopolitical shocks are currently roiling markets. The primary risks are earnings surprises, Fed policy shifts, and any unexpected inflation prints.
• Visa-Specific: Institutional interest is strong—Whittier Trust and Retirement Planning Group both increased holdings in Q2 2025, and Citigroup initiated coverage with a Buy on October 22, 2025. Technicals: V is above all major moving averages, RSI neutral (53.49), MACD bullish, and price action is steady. Fundamentals: Exceptional profit margin (52.2%), robust cash flow, and a reliable dividend (next ex-date August 2025). Earnings are due October 28, 2025—a critical catalyst.

## Term Structure & Volatility Analysis

• Baseline 90-day Historical Vol: 17.9%
• Current IV: 30.6% (IV Rank 100%—extremely elevated)
• Earnings Vol Multiplier: 2.71x (market expects a significant post-earnings move)
• Term Structure:
- 0-day (Oct 24): Clean IV 40.7% (SELL—overpriced)
- 5-day (Oct 31): Clean IV 22.4% (FAIR—calendar opportunity)
- 10-day (Nov 7): Clean IV 21.7% (FAIR)
- Longer expiries: Clean IV ~20.7–21.0% (FAIR)
• Calendar Spread Opportunity: The Oct 31 expiry is overpriced (Clean IV 22.4%) vs. Nov expiries (~20.7–21.7%). This >5% IV differential is significant and tradable.
• Put/Call Activity: Extremely bullish (Put/Call Volume Ratio 0.06), with heavy call buying and minimal put activity. Max pain is at $400 (far OTM), suggesting little dealer gamma pressure near current price.

## Trade Recommendation

🎯 SELL V 2025-10-31 350 CALL / BUY V 2025-11-07 350 CALL (Calendar Spread)

Stock Price: $347.74

### Trade Metrics

• Entry: Sell Oct 31 350 Call @ $3.20 (ask), Buy Nov 7 350 Call @ $4.40 (bid)
Net Debit: $1.20 (per spread)
• Risk: $120 per spread (max loss if V stays flat or falls)
• Reward: Theoretical unlimited if V rallies sharply, but realistically, aim to close for a credit as near-term IV collapses post-earnings.
• Breakeven: Depends on IV crush and spot movement; ideal scenario is V closes near $350 on Oct 31, then rallies into Nov 7.
• Probability: High probability of retaining premium if V does not surge past $350 by Oct 31 (delta ~0.35, ~65% chance OTM).
• Days to Expiration: 7 (short leg), 14 (long leg)

### Greeks & Volatility

• Net Delta: Slightly positive (benefits from rally, but not the main driver)
• Theta: Positive (earns from near-term decay)
• Vega: Positive (benefits from IV crush in near-term expiry)
• Current IV: Oct 31 = 35.6% (overpriced), Nov 7 = 28.8% (fair)
• IV Rank: 100% (sell near-term premium)
• Expected Move: ±$6.69 (1.92%) daily; earnings expected move likely larger.

### Why This Trade

Term structure is the primary driver: The Oct 31 expiry is overpriced (Clean IV 22.4%) relative to the Nov 7 expiry (Clean IV 21.7%), creating a calendar spread opportunity. This is amplified by the upcoming earnings event (Oct 28), which typically causes near-term IV to spike and then collapse post-announcement—a favorable setup for selling near-term premium and buying longer-dated, cheaper options[1].

Technical and fundamental backdrop: V is trading above all key moving averages, with bullish institutional flow (per MARKET INTELLIGENCE) and a Citigroup Buy initiation. The stock has strong fundamentals (52.2% profit margin, $20.29B net income) and a reliable dividend, though the yield is low. Sector peers are stable, and the broader market is in a bullish regime[2].

Earnings catalyst: The Oct 31 expiry captures the earnings move, while the Nov 7 expiry allows you to maintain long exposure if V gaps higher. This structure benefits from the IV crush that typically follows earnings, especially given the elevated IV Rank (100%) and the 2.71x earnings vol multiplier.

Risk/Reward: Defined risk (net debit), with the potential to profit from both time decay and IV contraction. If V surges past $350, the long Nov 7 call provides participation in the upside. If V falls or stays flat, the calendar spread retains value as near-term premium decays.

### Trade Management

• Entry: Place limit order at $1.20 net debit (mid of bid/ask).
• Target: Close for a credit as near-term IV collapses post-earnings, or manage at 50% of max profit.
• Stop: Consider exiting if V breaks decisively above $355 before Oct 31, or if the spread widens beyond $1.50 debit.
• Time Stop: Close the spread by Oct 31 expiry to avoid pin risk.

### Options Expiration Validation

• Recommended expiration: Oct 31 (short), Nov 7 (long)
• Earnings date: Oct 28, 2025
• Validation: ✅ Both legs expire AFTER earnings, capturing the post-earnings IV crush.

### Pricing Validation

• Oct 31 350 Call: OTM, intrinsic value $0, trading at $3.20 (