logologologologo
  • Home
  • Business
  • Markets
  • Exchange
  • Investment
  • Personal Finance

PayPal Stock Keeps Falling; Why This Bear Call Spread Could Bag A $185 Profit

PayPal (PYPL) is currently in a nasty downtrend, falling below a declining 50-day moving average. The stock also put in a bearish candle yesterday, closing near the low of the day. So, let’s look at how to set up a bearish option trade in PayPal stock via a bear call spread.

PayPal Stock: Setting Up A Bear Call Spread
A bear call spread involves selling an out-of-the-money call and buying a further out-of-the-money call.

The strategy can score a profit if the stock trades lower, sideways, and even if it trades slightly higher — so long as it stays below the short call at expiry.

On PayPal stock, an options trader could execute an August-expiring bear call spread using the 75 strike as the short monthly call option and the 80 strike as the long call. On Tuesday, that spread traded for around $1.85.

If executed at that price, the maximum profit on the trade would hit $185 per contract with a maximum risk of $315.

The spread will achieve the maximum profit if PYPL closes below 75 on Aug. 19, in which case the entire spread would expire worthless, allowing the trader to keep the $185 option premium.

The maximum loss will occur if PayPal stock closes above 80 on Aug. 19, which would see the premium seller lose $315 on the trade.

While some option trades have the risk of unlimited losses, a bear call spread is a risk-defined strategy, and you always know the worst-case scenario in advance.

You could set a stop loss if PYPL trades above 75, or if the spread value rises from $1.85 to $3.

As this is a bearish position, traders that think PayPal stock could move higher from here should not enter this trade. Traders may also prefer to wait until after the Fed minutes before opening new trades.

Poor Relative Strength

According to the IBD Stock Checkup, PYPL ranks No. 19 in its group. It holds a Composite Rating of 38, an EPS Rating of 81 and a Relative Strength Rating of 8.

Please remember that options are risky. Investors can lose 100% of their investment.

Related posts

March 24, 2023

TikTok CEO fails to convince Congress app is safe


Read more

Categories

  • Business
  • Content
  • Crypto
  • Exchange
  • Inflation
  • Investment
  • Markets
  • Personal Finance
  • Technology
  • Uncategorized

Archives

  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021

Recent Posts

  • TikTok CEO fails to convince Congress app is safe
  • Deutsche Bank and UBS shares hit as banking fears keep tight grip
  • SEC sues Tron founder Justin Sun, Lindsay Lohan, other celebrities over crypto sales
  • Employees are checked out at work more than at any time in history — and it makes no difference if they work from home or not. Here’s why
  • Rolls-Royce ‘Wraith Black Arrow’ marks end of V12 coupe era

About Us

The Alpha Cut a Vida Street LLC Company
1404 N. Ronald Reagan Blvd.
Suite 1120
Longwood, FL 32750

Link

(843) 256-4375
https://thealphacut.com

Why Us

Terms & Privacy
Policy & Procedure
Disclaimer

This material is not an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only.
Any performance results discussed herein represent past performance, not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, investment performance may be adjusted after the publication of this report. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance levels or be suitable for your portfolio.
All data in this communication is provided for informational purposes only and is not intended for trading or investing purposes. We expressly disclaim the accuracy, adequacy, or completeness of any data and content provided by financial exchanges, individual issuers, their respective affiliates and business partners and shall not be liable for any errors, omissions or other defects in, delays or interruptions in such data, or for any actions taken in reliance thereon. You agree not to copy, modify, reformat, download, store, reproduce, reprocess, transmit or redistribute any data or information found herein or use any such data or information in a commercial enterprise without obtaining our prior written consent.
We make no express or implied warranties or representations and shall have no liability whatsoever with respect to any data contained herein. The data may not be further redistributed or used to create indices or other financial products. This report and the views expressed herein are subject to change at any time based upon market or other conditions (such as domestic and global economic trends) and are current as of the date of publication hereof. The information, analysis, and opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations for any individual or entity.
We emphasize that Investment in the securities of smaller companies can involve greater risk than is generally associated with investment in larger, more established companies, and can result in significant capital losses that may have a detrimental effect on the value of your investments.
Forecasting represents predictions of market prices and/or volume patterns utilizing varying analytical data. It is not representative of a projection of the stock market, or of any specific investment.
Nothing contained in this material is intended to constitute legal, tax, securities or investment advice, nor an opinion regarding the appropriateness of any investment. The general information contained in this publication should not be acted upon without obtaining specific legal, tax and investment advice from a licensed professional.
Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth.As with any structuring of a portfolio of investments, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.
The information, analysis and opinions expressed herein are for general, impersonal information only and are not intended to provide specific advice or recommendations for any individual entity.

copyright © Alpha Cut 2021. All Right Reserved
The Alpha Cut a Vida Street LLC Company