PayPal Stock Moves Higher After Upgrade

PYPL ended 2021 with steep losses

Deputy Editor
Jan 3, 2022 at 10:03 AM
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The shares of payment services concern PayPal Holdings Inc (NASDAQ:PYPL) are starting 2022 off on the right foot, last seen up 1.4% at $191.24. This positive price action comes after BMO upgraded the equity to "outperform" from "market perform," citing the company's current valuation. The firm did, however, cut its price target from $278 to $224.

Hopefully PayPal stock can shake off its lackluster late-2021 performance, which saw a November bear gap force the security below the $200 area for the first time since November 2020. The equity has support from the 20-day moving average once again, though most long-term trendlines remain well above PYPL on the charts. Year-over-year, the shares have taken a 19.5% haircut. 

Coming into today, sentiment surrounding PayPal stock was quite optimistic. Of the 28 in coverage, 25 call the stock a "buy" or better. Plus, the 12-month consensus price target of $273.58 was a healthy 42.3% premium to Friday night's close. 

This bullishness is echoed in the options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), PYPL sports a 50-day call/put volume ratio of 3.26, which stands higher than 88% of readings in its annual range. This means long calls have rarely been more popular during the past year. 

Now could be an ideal opportunity to weigh in on the stock's next move with options. This is per PayPal stock's Schaeffer's Volatility Index (SVI) of 33%, which sits in the relatively low 27th percentile of its 12-month range -- suggesting volatility expectations are unusually low right now. What's more, the stock's Schaeffer's Volatility Scorecard (SVS) sits at 96 out of 100, meaning PYPL has exceeded options traders' volatility expectations in the past year.


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