Schaeffer's Top Stock Picks for '25

Paypal Holdings Inc (PYPL) Call Players Brush Off Apple Pay Blow

Paypal Holdings Inc (NASDAQ:PYPL) has found support in the $38 region amid an Apple-induced tumble

Mar 24, 2016 at 2:52 PM
facebook X logo linkedin


Rumors that Apple Inc. (NASDAQ:AAPL) will expand its Apple Pay base are pressuring electronic payment processor Paypal Holdings Inc (NASDAQ:PYPL) today. At last check, the stock was off 3.5% at $39.10, after finding a foothold in the $37.50-to $38 region -- home to its 30-day moving average -- which worked as resistance in late 2015 and early 2016, but has more recently served as support. Despite today's slip, calls are once again flying off the shelves -- although not all of the activity is of the traditional "vanilla" kind.

160324pypl

Taking a quick step back, roughly 28,000 calls have changed hands -- double what's typically seen at this point in the day, and nearly five times the number of puts traded. Most active is PYPL's weekly 4/29 42-strike call, where it looks as if there may be a mix of buy- and sell-to-open activity occurring.

For those purchasing new positions, the goal is for PYPL to rally north of $42 by the close on Friday, April 29 -- when the weekly series expires. Conversely, those writing the calls to open are betting that $42 will serve as a ceiling for the shares over the next five weeks.

More broadly speaking, today's penchant for calls over puts just echoes the withstanding trend seen in PYPL's options pits. In fact, the stock's gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 0.32 indicates near-the-money call open interest more than triples put open interest among options expiring in three months or less. What's more, call open interest on PYPL is at an annual high.

Outside of the options pits, skeptics have been rushing PYPL of late. Short interest, for instance, surged 54% in the last two reporting periods to 35.3 million shares -- the most on record. Plus, 10 out of 28 analysts maintain a "hold" or worse rating, while the average 12-month price target of $41.47 represents a slim 6% premium to its current perch.

As Paypal Holdings Inc (NASDAQ:PYPL) continues to bounce from the now-reliable $38 region and resume its longer-term uptrend -- the shares are up 28% from their Jan. 20 year-to-date low of $30.52 -- the door is wide open for shorts and analysts to change their tune. Going forward, a capitulation from these bearish bettors and/or a round of bullish brokerage notes could help fuel the stock's fire.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical  levels, and top economic stories straight to your inbox.

 
 

You have the chance to join one of Bernie's most exclusive programs, complete access at HUGE savings!

As we prepare for a new administration to take the reins in Washington, the near-term market landscape is rife with uncertainty.

The Federal Reserve has already hinted at the turbulence ahead, lowering its interest rate outlook for 2025.

Meanwhile, breakthroughs in artificial intelligence (AI), quantum computing, and other transformative sectors have unlocked incredible profit potential.

But these opportunities are fleeting, and timing is everything. That's where Quick-Hit Trader comes in.

Quick-Hit Trader is designed for precision and speed, getting you in and out of the market in a flash. While other investors scramble to navigate volatile conditions, you'll have access to expertly curated trades that leverage these rapid shifts to deliver explosive profits in short order.

This is your chance to capitalize on the fast-moving market like never before. Are you ready to make your move?