MasterCard Incorporated (MA) is a global transaction and payments company with operations around the world. The company’s stock is currently trading around $99.90 in a 52 week range of $74.47-$99.93. The stock has been performing relatively well this year with shares rallying nearly 15.7% year to date. MA is set to report earnings tomorrow morning and early indications point to a possible rally on earnings day.
MA has rallied 8 of the past 12 quarters with an average move of 3.24%. The stock is also higher 10 of the past 12 quarters form earnings day to expiry. The stock is also looking very strong on the Ichimoku Cloud with shares trading well above the Ichimoku cloud and the stock is just off of 52 week highs. With both historical movement trands and the chart showing bullish patterns I want to be long MA into earnings.
The options market is implying a move of around $3.20 I want to calculate an upside target and set up an options trade. Using this implied move I will set up a trade with a target of $103.10.
Trade: Buying the MA Oct 30th Weekly 101-103 Call Spreads for $0.60
Risk: $60 per 1 lot
Reward: $140 per 1 lot
This trade goes to max value if the stock moved to the measured move target and also offers a trader a reward to risk ratio of better than 2-1.