PayPal Holdings Inc. (PYPL) brushed off a price-target cut from $190 to $145 at Berenberg, a multi-national investment bank, notes analyst Fernanda Horner of Schaeffer Investment Research.
Instead, the fintech stock moved higher after Bloomberg reported Elliott Investment Management is building its stake in the company, amid plans to push for ramped up cost-reduction efforts. The move could make the activist investor one of PayPal's five largest shareholders down the line.
PayPal stock has consolidated below the $90 level since May. Despite a 19% quarterly gain and bounce off a June 30, five-year low of $67.58, the shares are still off 59.1% year-to-date and are seeing today's rally stopped short at PYPL's 80-day moving average.
Although calls still outnumber puts on an absolute basis, the equity's 50-day put/call volume ratio of 0.51 over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is in the elevated 82nd percentile of its annual range. This means long puts have been getting picked up at a quicker-than-usual clip in the last two months.
Options bulls are piling on. So far today, 23,000 calls have crossed the tape, which is double the intraday average, as opposed to 12,000 puts. Most popular is the 7/29 85-strike call, followed by the 90-strike call in the same series.
Those options traders are in luck, as the security's Schaeffer's Volatility Scorecard (SVS) sits at a 92 out of 100. This means PYPL has exceeded option traders' volatility expectations during the past year.
