4 Trade Ideas for PayPal: Bonus Idea
PayPal, $PYPL, comes into the week at the top of a resistance zone that has been important for the past 12 months. This range has been midway between the Covid low and a 113% extension of the retracement of the post pandemic move higher, meanings the price has been below the Covid low for more than a year. The Bollinger BandsĀ® are openings higher as price reaches the top of the range, but there are upper shadows appearing on the candles, suggesting some exhaustion is possible. The RSI is rising in the bullish zone with the MACD positive and moving higher. There is resistance at 67.75 and 71 and a gap to fill to 72.50 then 74.50 and 76.25 before 78 and 83.50. Support lower sits at 65 and 63 then 62 and 61. Short interest is low at 2.2%.Ā
The stock does not pay a dividend. The company is expected to report earnings next on July 31st. The June options chain shows biggest open interest at the 60 and 65 put strikes. On the call side it is biggest at 75 then 65 and 70 before 72.50. In the July chain open interest builds from 67.50 to a peak at 60 then tails to 50 on the put side. The call sees a build from 62.50 to a plateau from 67.50 to 80 before tailing to 95. Finally, the August chain has open interest spread from 65 to 52.50, biggest at 6, on the put side and a peak at 60 then tailing higher to 90 on the call side.
PayPal, Ticker: $PYPL
Trade Idea 1: Buy the stock on a move over 68.50 with a stop at 65.
Trade Idea 2: Buy the stock on a move over 68.50 and add a July 65/60 Put Spread ($1.10) while selling the August 80 Call ($1.03).
Trade Idea 3: Buy the July/August 72.50 Call Calendar ($1.68) and sell the July 60 Put (37 cents).
Trade Idea 4: Buy the August 60/70/75 Call Spread Risk Reversal (35 cents).
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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with the first week of June in the books, saw equity markets were mixed with the large caps and tech heavy Nasdaq showing renewed strength while small caps continue to flounder.
Elsewhere look for Gold to continue to consolidate the long move higher while Crude Oil moves lower in a consolidation range. The US Dollar Index continues in broad consolidation while US Treasuries continue their long term downtrend. The Shanghai Composite looks to continue the short term move lower while Emerging Markets continue the short term move lower in a consolidation channel.
The Volatility Index looks to remain very low and stable making the path easier for equity markets to the upside. The charts of the SPY and QQQ look strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY continue to step higher and look strong as well with an eye on potential momentum divergences. The IWM continues to be dead money, as it has been for the past 2Ā½ years. Use this information as you prepare for the coming week and tradāem well.
