Trade Alert - (PYPL) November 15, 2019

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 - (PYPL) – BUY

BUY the PayPal Holdings, Inc. (PYPL) December 2019 $92.50-$97.50 in-the-money vertical BULL CALL spread at $4.40

Opening Trade

11-15-2019

expiration date: December 20, 2019

Portfolio weighting: 10%

Number of Contracts = 23 contracts

One of my favorite fintech plays has received negative news the past few days. Google has stated their intentions to combine with Citigroup to offer banking to customers.

Facebook has aggressively moved into the payment space as well.

Then today PayPal Holdings Inc said it had stopped payment support to PornHub's models after it found the adult entertainment website made certain payments without the permission of the payment processor.

PornHub, owned by Luxembourg-headquartered company MindGeek, said it was "devastated by PayPal's decision to stop payouts to over a hundred thousand performers who rely on them for their livelihoods".

It’s YTD whether big tech can move into banking and the loss of PornHub is just a minor blip.

PayPal is one of the few companies down today after the U.S. administration signaled getting closer to phase one of the China trade deal.

This is a trade that PayPal holdings won’t drop more than 5.5% in the next 36 days.

This is a good buy and hold at these levels if you do equities.

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

Buy 23 December 2019 (PYPL) $92.50 calls at………….….……$11.12

Sell short 23 December 2019 (PYPL) $97.50 calls at…….…….$6.72

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

Potential Profit: $5.00 - $4.40 = $0.60

(23 X 100 X $0.60) = $1,380 or 13.80% in 36 days.

To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.

If you are uncertain on how to execute an options spread, please watch my training video on “How to Execute a Vertical Bull Call Spread” 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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