Traders celebrated Wednesday’s Federal Reserve announcement with a bevy of buying. Stock watchers looking to get paid should feast their eyes on Paypal Holdings Inc (PYPL), which is boasting one heck of a breakout pattern.
Since PYPL began trading as its own entity last July, the online payment company has found a home on the range. Trendless, as the traders say.
There PayPal sits, beckoning to speculators one and all to try their hand at gaming the upcoming resistance breach.
Sure, the back and forth creates some opportunities for the nimble, but PayPal lovers want to see a bona fide trend. One with follow through, multiple swings and low-risk entries to capitalize on. Thus far, such developments have been largely absent.
It appears, however, the time is at hand for PayPal stock to trend like a good little stock should.
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PayPal’s price action over the past two months has constructively brought PYPL to back to the high-end of its multi-month trading range. The 20- and 50-day moving averages rising beneath the technicals look promising.
While a bit more consolidation may be in store, traders should eye the $40 level closely in the weeks ahead. A pop above this ceiling could send bulls the world over flocking to PYPL.
PayPal Stock: Receive a Bullish Call in PYPL
If you’re seeking payment in PayPal look no further than a June bull call spread. Buy the June $40/$44 call spread for $1.50. The vertical spread consists of buying to open the June $40 call while selling to open the June $44 call.
The spread positions you perfectly for maximum profits should PayPal stock rise 10% over the coming months.
The risk is limited to the initial $1.50 debit and will be lost if PYPL sits below $40 at expiration. The reward is limited to the distance between strikes minus the net debit, or $2.50, and will be captured if the stock can rally above $44 by expiration.
At the time of this writing Tyler Craig had no positions in any of the aforementioned securities.
