Paypal Holdings Inc (PYPL) Bear Bets a Million on Record Lows

Paypal Holdings Inc's (NASDAQ:PYPL) weekly 10/30 28-strike put has been popular in recent sessions

by Karee Venema

Published on Sep 30, 2015 at 2:24 PM

Paypal Holdings Inc (NASDAQ:PYPL) put volume has jumped to six times what's typically seen at this point in the day -- with the contracts outpacing their call counterparts by a more than 3-to-1 ratio. A number of speculators are rolling the dice on the equity's short-term trajectory, with six of PYPL's 10 most active options expiring next month.

Seeing the majority of the action is the security's weekly 10/30 28.50-strike put, where 15,099 contracts have changed hands. Almost all of this activity is a result of a sweep of 11,050 contracts that, according to Trade-Alert, was bought to open for $1.03 million (number of contracts * $0.93 premium paid * 100 shares per contract).

This echoes what was seen in PYPL's options pits yesterday, when the same strike saw 14,860 contracts cross the tape -- including two blocks totaling 11,901. It appears this activity was of the buy-to-open kind, as well, meaning the traders expect the stock to be sitting south of $28 at the close on Friday, Oct. 30 -- when the weekly series expires. This would mark record-low territory for the stock, which began trading in July.

More broadly speaking, speculators have shown a preference for near-the-money puts over calls among options slated to expire in three months or less. In fact, PYPL currently sports a gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 1.18.

Drilling down on the front-month series, peak put open interest of 15,299 contracts is currently found at the October 30 strike. In the past 10 sessions alone, over 10,000 contracts have been added here -- second only to the aforementioned weekly option. Speculators who may be buying to open this option are betting on PYPL to breach the round-number $30 mark by the close on Friday, Oct. 16 -- when front-month options expire.

Technically speaking, Paypal Holdings Inc (NASDAQ:PYPL) has been steadily losing ground since its July 20 open at $41.46, down 26%. However, the shares have yet to breach $30, which marks its Aug. 24 all-time low. At last check, PYPL was enjoying some broad-market tailwinds, up 0.3% at $30.72.

A Schaeffer's exclusive


Access your FREE insider report before it's too late!



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

IRA/401k: The Crash-Proof Retirement Plan
Use gold to protect any IRA, 401(k), or retirement account from a looming financial crisis.
Stocks Eye Notable Weekly Gains on 3-Day Surge
Stocks are eyeing big weekly gains
WW Stock Brushes Off Bull Note
Morgan Stanley upgraded the Weight Watchers parent to "overweight" from "equal weight"
IRA/401k: The Crash-Proof Retirement Plan
Use gold to protect any IRA, 401(k), or retirement account from a looming financial crisis.