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Weekly Three Extreme Trades / Extreme Trade: PayPal Holdings (PYPL) Oversold

Extreme Trade: PayPal Holdings (PYPL) Oversold

April 10, 2018

PayPal Holdings Inc. (NASDAQ:PYPL)is a technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants. The Company’s combined payment solutions, including its PayPal, PayPal Credit, Braintree, Venmo, Xoom and Paydiant products, compose its Payments Platform. The Company operates a two-sided global technology platform that links its customers, both merchants and consumers, around the globe to facilitate the processing of payment transactions, allowing it to connect merchants and consumers. The Company allows its customers to use their account for both purchase and paying for goods, as well as to transfer and withdraw funds. The Company enables consumers to exchange funds with merchants using a range of funding sources, which include a bank account, a PayPal account balance, a PayPal Credit account, a credit and debit card or other stored value products, such as coupons and gift cards. The Company offers consumers person-to-person (P2P) payment solutions through its PayPal Website and mobile application, Venmo and Xoom.

Technically oversold at its lower Bollinger Band with oversold reads on RSI, MACD and Williams’ %R, we believe PYPL could rebound to test $84 again, near-term.  While the stock did pull back after a Wall Street Journal report noted Amazon could use Alexa for peer to peer payments, we believe a great deal of fear has been priced into PYPL.  Also, Morgan Stanley just reiterated its bullish view on the stock, noting that PYPL has maintained its strong lead in online acceptance with 79% of the top 500 online merchants accepting its wallet.  They also noted that

Amazon Pay is present at 12% of the top 500 online retailers. “We expect PayPal to continue growing at or above the pace of eCommerce, and the network benefit of being a leader among merchants should continue to drive engagement higher,” they noted.

There are two ways to trade PYPL here.

One is to buy the PYPL stock at current market prices.

The other is to buy to open the PYPL May 18, 2018 75 calls at market prices.