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

Sep 30, 2015 at 2:24 PM
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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.
 

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