When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Tech Alert - PayPal Holdings, Inc. (PYPL) - BUY
BUY PayPal Holdings, Inc. (PYPL) November 2021 $215-$220 in-the-money vertical BULL call spread at $4.20
Opening Trade
10-21-2021
expiration date: November 19, 2021
Portfolio weighting: 10%
Number of Contracts = 23 contracts
This is a short-term bet that fintech company PayPal (PYPL) will stay above $220 in the next 29 days.
This is the third time this year I am playing PYPL from the long side after two days of weakness. Both call spreads earlier this year took profits.
The stock is big on news that PYPL is exploring a $45 billion acquisition of social media company Pinterest Inc., in what could be the biggest technology deal of the year and move the payments company closer to its ambitions of becoming a “super app.”
The reason for the big sell off is — who wants to pay for such a big deal?
The price tag will take time to absorb if this deal gets through much like the Salesforce acquisitions the past 2 years.
Long term, this is strategically on point and will help the company compete with the behemoths. PINS isn’t doing much as a standalone company and PYPL would supercharge its business under its umbrella of assets.
After this acquisition spree, this stock will need some time to digest, but I am highly bullish on PYPL long term.
Here are the specific trades you need to execute this position:
Buy 23 November 2021 (PYPL) $215 calls at…………...………$35.10
Sell short 23 November 2021 (PYPL) $220 calls at………….$30.90
Net Cost:……………………..........................…….………..…….....$4.20
Potential Profit: $5 - $4.20 = $.80
(23 X 100 X $.80) = $1,840 or 19.05% in 29 day
If you are uncertain on how to execute an options spread, please watch my training video by clicking here.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
