Options Bulls Blast PayPal Stock on BNPL Purchase

Calls have been popular in the options pits lately

Deputy Editor
Jun 20, 2023 at 11:07 AM
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PayPal Holdings Inc (NASDAQ:PYPL) is making headlines today, after private equity firm KKR & Co (KKR) agreed to buy up to 40 billion euros ($43.71 billion) of the company's buy now, pay later (BNPL) loans in Europe.

PYPL is up 1.4% at $67.37 at last glance, on track for its fourth-straight gain and further removing itself from May 26 five-year lows of $58.95. The stock is heading toward its highest close since a May 9 bear gap. While the shares are still 5% lower on the year, June's 9.1% pop is on track to be the best month since January. 

Options bulls are blasting PayPal stock in response. So far, 143,000 calls have been exchanged, volume that's four times the amount typically seen at this point. The weekly 6/23 71-strike call is the most active, with new positions being bought to open there. 

Options traders have generally been much more bullish than usual, per PYPL's 50-day call/put volume ratio of 2.82 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio ranks higher than all other readings from the past year. 

These premiums are attractively priced, per the stock's Schaeffer's Volatility Index (SVI) of 32%, which sits in the low 3rd percentile of its annual range. This means options traders are pricing in very low volatility expectations at the moment. 

 

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