Selling PYPL puts for income.
Shares of PayPal (PYPL) rallied sharply after the company’s last earnings report.
Consumer payments continue to generate profits for PYPL and the stock trades at a reasonable valuation compared to growth prospects.
Shares pulled back Friday as the overall market weakened. But the stock is still holding up well above it’s pre-earnings levels and key technical support.
This pullback gives us a great opportunity to set up a new income play with our put-selling strategy.
By selling the October $87.50 puts near $4.40, we’re able to collect an annualized yield near 35%, while also giving us roughly $5.00 per share in cushion between the current market price for PYPL and our strike price.
- Sell (to open) 1 PYPL October 21st $87.50 put
- Limit: $4.40 or more
- The new position will represent roughly 10.1% of our model.
- 10:17 Updating limit price to $4.10
- 10:23 Executed
- Sold 1 PYPL October 21st $87.50 put @ $4.22