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Trading Idea of the Week: PayPal (PYPL) Is Up 32% YTD – Does it Have More Upside?

Paypal has had a lot going for it as of late – In addition to its core business, Venmo has been gaining traction and the company recently announced intentions to make a large investment in Uber.  Take a look at what these two analysts have to say about PYPL – PayPal’s Latest mega-investment in Uber signals growing global ambitions and PayPal First Look: Solid Performance, No Need to Fear.

PYPL rallied to record highs early in the year and has been steadily grinding higher since.  A notable downside support level is 108.80 which reflects prior resistance.  Slightly below the horizontal level further support is found from the 20-day moving average which has been able to hold the stock higher for most of the year thus far.

If you agree there’s further upside ahead for PYPL, consider this trade which is a bet that the stock will continue to advance over the next six weeks, or at least not decline very much.

Buy To Open PYPL 7JUN19 107 Puts (PYPL19067P107)
Sell To Open PYPL 7JUN19 110 Puts (PYPL19067P110) for a credit of $0.95 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when PYPL was trading near $111.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be $2.50 per spread.  Each contract would then yield $92.50 and your broker would charge a $300 maintenance fee, making your investment $207.50 ($300 – $92.50).  If PYPL closes at any price above $110 on June 7, both options would expire worthless, and your return on the spread would be 45% (421% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

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Making 36%

Making 36% — A Duffer's Guide to Breaking Par in the Market Every Year in Good Years and Bad

This book may not improve your golf game, but it might change your financial situation so that you will have more time for the greens and fairways (and sometimes the woods).

Learn why Dr. Allen believes that the 10K Strategy is less risky than owning stocks or mutual funds, and why it is especially appropriate for your IRA.

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Success Stories

I have been trading the equity markets with many different strategies for over 40 years. Terry Allen's strategies have been the most consistent money makers for me. I used them during the 2008 melt-down, to earn over 50% annualized return, while all my neighbors were crying about their losses.

~ John Collins