Will Paypal (PYPL) Continue Its Upward Momentum?
Several articles have recently been published on the positive outlook for PYPL. Here are two of them – Paypal Holdings Stock Is Itching for a Breakout and BMO Capital Markets Boosts Paypal Price Target to $89.00.
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Technicals
As the above technical article has mentioned, the 20-period moving average on a weekly chart held Paypal stock higher following the earnings-inspired correction in early February. PYPL has since climbed back above the same moving average on a daily chart, which has held declines in the month thus far. The stock has also breached above the psychological $80 price point which had held prices lower in late February.
![PYPL Graph March 2018 PYPL Graph March 2018](http://www.terrystips.com/blog/wp-content/uploads/PYPL-Chart-March-2018.png)
*source Tradingview.com
If you agree there's further upside ahead for Paypal, 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 20APR18 77.5 Puts (PYPL180420P77.5)
Sell To Open PYPL 20APR18 80 Puts (PYPL180420P80) for a credit of $0.83 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when PYPL was trading near $81. Unless the stock rallies quickly from here, you should be able to get close to this amount.
If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee). Each contract would then yield $81 and your broker would charge a $250 maintenance fee, making your investment $169 ($250 – $81). If PYPL closes at any price above $80.00 on April 20, both options would expire worthless, and your return on the spread would be 48% (449% annualized).
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Changes to Investor’s Business Daily (IBD) Top 50 This Week:
![IBD Underlying Updates March 8, 2018 IBD Underlying Updates March 8, 2018](http://www.terrystips.com/blog/wp-content/uploads/IBD-Underlying-Updates-March-8-2018.jpg)
We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run. Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.
As with all investments, you should only make option trades with money that you can truly afford to lose.
Happy trading,
Terry
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Any questions? I would love to hear from you by email (terry@terrystips.com), or if you would like to talk to our guy Seth, give him a jingle at 800-803-4595 and either ask him your question(s) or give him your thoughts. seth@terrystips.com
You can see every trade made in the actual option portfolios conducted at Terry’s Tips and learn all about the wonderful world of options by subscribing here. Why wait any longer to make this important investment in yourself? I look forward to having you on board, and to prospering with you.
Terry
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