DailyPlay – Opening Trade (PYPL) – April 23, 2024

PYPL Bullish Opening Trade Signal

Investment Rationale

PayPal has lost the vast majority of its market value over the past 3 years and isn’t likely on a lot of watchlists for investors. However, recent strength and performance warrant a second look, especially when the fundamentals look quite strong and the risk to reward is favorable. 

Technical Analysis

PYPL has shed 80% of its value in the past 3 years, but recently in the past 6 months has started to form a bottom with a series of higher highs and high lows. It has the potential to break out higher from its $68 resistance level, which would target the $73 gap-fill level above. 

PYPL – Daily

Fundamental Analysis

After spinning off from eBay, PYPL has continued to innovate within the payments space and returned impressive growth numbers each and every year. Averaging nearly 15% EPS growth over the past few years and improving operating margins of over 16%, it is outright cheap at only 12x forward earnings. Especially when analysts expect 13% EPS growth over the next few years. With very little debt and strong cash flows, the risks are low when investing in PYPL at these valuations. 

Trade Details

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish Debit Spread

Details: Buy to Open 9 Contracts June 21st $65/$72.50 Call Vertical Spreads @ $2.25 Debit.

Total Risk: This trade has a max risk of $2,025 (9 Contracts x $225) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $225 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is turning from mildly bearish to bullish.

1M/6M Trends: Mildly Bearish/ Bullish

Relative Strength: 7/10

OptionsPlay Score: 111

Stop Loss: @ $1.13 Credit. (50% loss of premium paid)

View PYPL Trade

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that these prices are based on Monday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

View PYPL Trade