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: