Recent PYPL options buyers are likely cheering today
Shares of PayPal Holdings Inc (NASDAQ:PYPL) are higher this morning, after the company confirmed plans to purchase Square (SQ) rival and Swedish startup iZettle for $2.2 billion. The purchase is expected to increase PayPal's presence inside brick-and-mortar stores in more than 11 new countries, and prompted price-target hikes from Oppenheimer (to $85) and Credit Suisse (to $93).
PYPL was up 1.7% at $80.57, at last check, continuing its trend higher since a bounce off its 200-day moving average earlier this month. PayPal stock has been in a channel of lower highs since its January record of $86.32, but the online payment concern has managed to find support in the $70-$72 range.
In the options pits, traders have been bullish in recent weeks, with data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) showing a 10-day call/put volume ratio of 2.80, ranking in the 76th annual percentile. This shows calls have been purchased over puts at a faster-than-usual clip.
What's more, those purchasing premium on PayPal are in luck. The stock's Schaeffer's Volatility Index (SVI) of 26% ranks in the 26th annual percentile, suggesting short-term options are attractively priced, from a volatility standpoint.
Further, the security's Schaeffer's Volatility Scorecard (SVS) is a lofty 86 (out of 100) which shows PYPL has consistently made bigger moves than the options market was expecting over the past 12 months