Yesterday my colleague Andrea Kramer offered some thoughts on Visa Inc (V) and I wanted to follow-up with a couple of comments of my own. The company is scheduled to report after the bell tonight and optimism seems to creeping in. According to this article, some analyst are looking for Visa to "exceed consensus estimates." In Andrea's article she touched on the option activity and I have some data that emphasizes that point.

When I analyzed the stock back in June, I discussed looking at the buy-to-open data from the International Securities Exchange (ISE). Those who regularly follow my my daily option skews scan may have noticed that Visa has started to pop up on the call side again. Compiling the numbers shows there have been roughly 14,000 calls added over the last five days. That compares to less than 5,000 puts over that same time.

Taken as a whole, it seems that expectations are running high. While it is possible that the company can still hurdle that higher bar, I think the key take away is the risk. As it stands now, the shares are fighting to break a near-term downtrend. Taking a wait-and-see approach ahead of earnings could mean missing out on an immediate post-earnings pop but I think that is worth giving up. A positive reaction would break the downtrend and short up the technical picture. If that happens, I think there will be plenty of other opportunities on the long side. If we see a negative reaction, the IPO levels could eventually be in jeopardy.

Chart Courtesy of Thomson Financial