Trade Alert - (PYPL) May 27, 2021

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.

Tech Alert - PayPal Holdings, Inc. (PYPL) - BUY

BUY PayPal Holdings, Inc. (PYPL) June 2021 $235-$240 in-the-money vertical BULL call spread at $4.40

Opening Trade

5-27-2021

expiration date: June 18, 2021

Portfolio weighting: 10%

Number of Contracts = 22 contracts

This is a short-term bet that fintech company PayPal (PYPL) will stay above $240 in the next 22 days.

I executed a bull call spread in PYPL in April that was profitable and I like the chart set up here after this bout of volatility. Many high-quality tech names have experienced multiple contractions lately making them more affordable.

At a technical level, PYPL has support at the 50-day moving average and after coming back down from $310, I believe PYPL is highly tradable from the long side in the short term.

I tried looking at AMD and PLTR before I pulled the trigger on this one and found those call options too price for my liking.

PYPL along with SQ is my favorite fintech plays and PYPL is the future of digital payments.

PYPL consistently beat earnings and sales projections, stretching back to at least 2010. In that year, it earned a mere 29 cents per share. In 2019, the company reported EPS of $2.96 per share. For 2020, the firm's earnings grew 31% to $3.88 a share. Analysts expect the company's EPS to grow 18% in 2021 and another 26% in 2022.

The evolution of digital payments is a conviction “megatrend” that is here to stay.

It’s time to add a little risk as we overcome a torrent of inflation scare news to settle into a post-earnings gray space. Lastly, PYPL seemed to generate higher gains when the headlines are flooded with crypto news which we have been receiving a steady dose of.

Buy this stock and hold, my end-of-year target is $375.

Here are the specific trades you need to execute this position:

Buy 22 June 2021 (PYPL) $235 calls at……..…….………$25.40

Sell short 22 June 2021 (PYPL) $240 calls at………..….$21.00

Net Cost:…………………..................…..…….………..…….....$4.40

Potential Profit: $5 - $4.40 = $.60

(22 X 100 X $.60) = $1,320 or 13.64% in 22 days

If you are uncertain on how to execute an options spread, please watch my training video by clicking here.

The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.

Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.

Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.

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