Harnessing Volatility: A Strategic Long Straddle on Visa (V) Ahead of Q3 Earnings

For investors seeking to capitalize on high-impact price swings, Visa Inc. (V) presents a compelling case ahead of its July 29, 2025, earnings release. The long straddle strategy—simultaneously purchasing a call and put option at the same strike price and expiration—offers a structured way to profit from the anticipated volatility. Let's dissect how technical analysis and volatility expectations align to make this a strategic opportunity.

The Case for a Long Straddle on Visa

Visa's upcoming earnings event is a catalyst for volatility. The company is expected to report $2.83 EPS on $9.82 billion in revenue, a potential 17% year-over-year increase in earnings. Historically, Visa's stock has exhibited sharp price movements post-earnings. For instance, the April 2025 report triggered a +1.2% surge, while the October 2024 earnings drove a +2.9% rally. These patterns suggest the market often reacts decisively to Visa's results.

The options market already reflects this expectation. As of July 19, 2025, Visa's implied volatility (IV) stands at 24.68, with an IV percentile of 86.11%—a high level by historical standards. This elevated IV indicates that the market is pricing in a ~5% move in either direction following the earnings release. A long straddle thrives in such environments, as it benefits from large price swings regardless of direction.

Technical Setup: Strike Prices and Expirations

The August 2025 options chain provides a robust framework for this strategy. The August 1, 2025 expiration is ideal, as it allows sufficient time for the market to react to the earnings announcement on July 29. Key strike prices include:
- $350 (0.27% in-the-money): Breakeven at $354.05 (upside) and $345.95 (downside). Delta of 50.33% suggests a roughly 50% probability of expiring in the money.
- $352.50 (0.99% in-the-money): Breakeven at $356.92 and $348.08. Delta of 53.14%.
- $355 (1.70% in-the-money): Breakeven at $359.29 and $350.71. Delta of 56.21%.

The $350 strike offers a balanced risk-reward profile. With an IV crush potential (post-earnings volatility drop) and a 2.18% return for a covered call variant, it aligns well with the long straddle's goal of capturing directional moves.

Managing Volatility Risks

While high IV is favorable for a long straddle, it also introduces a critical risk: IV crush. After earnings, if the stock moves sharply but IV collapses, options premiums may erode faster than expected. To mitigate this:
1. Monitor Implied Move (IM): The market currently implies a ~5% move for Visa. If the actual move exceeds this, the straddle profits; if it falls short, losses could occur.
2. Breakeven Analysis: For the $350 straddle, the stock must rise above $354.05 or fall below $345.95 to breakeven. Historical data shows Visa's post-earnings moves often exceed these thresholds.
3. Delta Adjustments: As earnings approach, the delta of in-the-money options will increase, amplifying directional exposure. Traders should adjust positions if the stock gaps up/down post-announcement.

Strategic Implementation

To execute the long straddle effectively:
- Entry Timing: Open the straddle 3-5 days before earnings (e.g., July 24-26) to capture IV expansion.
- Capital Allocation: Allocate 1-2% of portfolio capital per straddle, given the high IV environment.
- Exit Strategy: Close the position 1-2 days post-earnings to avoid IV decay, or hold through August 1 expiration if the move is sustained.

Final Considerations

Visa's long straddle strategy is not without risks. The stock's dividend yield (0.69% annualized) and market cap ($678.5 billion) suggest relative stability, but large-cap stocks can still experience sharp corrections. Investors should also consider macroeconomic factors, such as interest rate trends, which could influence the broader market's reaction to Visa's earnings.

For those who can tolerate short-term volatility and have a bullish/bearish edge (supported by the 6-4-D price pattern), this strategy offers a disciplined way to leverage Visa's earnings-driven momentum. As always, position sizing and risk management remain paramount.

Investment Advice: Open a long straddle on Visa using the $350 strike and August 1, 2025 expiration. Monitor the stock's price action and IV levels closely, and be prepared to adjust the position if the earnings report triggers an unexpected gap. This approach balances the potential for high returns with measured risk.