Why This Trade?
PayPal (PYPL) is currently trading at $78.75 (-0.57%), and despite near-term volatility, the stock is showing signs of a potential turnaround. Management’s latest earnings call pointed to a profitability focus, and while growth concerns persist, the market is taking notice.
Instead of buying shares outright or chasing long calls, a bull call spread allows traders to profit from a moderate price increase while keeping costs in check.
The Strategy Breakdown
A bull call spread is a vertical spread where traders buy a call option at a lower strike and sell another call at a higher strike, reducing the trade’s net cost.
Trade Setup (August 15, 2025 Expiration):
- Buy 1 PYPL $80 Call
- Sell 1 PYPL $90 Call
- Net Cost: The difference in premiums between the two strikes (based on current options chain data).
📈 Max Profit: Achieved if PYPL closes at or above $90 at expiration. The gain is capped at the $10 difference between strike prices minus the premium paid.
📉 Max Loss: Limited to the net premium paid if PYPL remains below $80 at expiration.
Risk Management & Adjustments
What Could Go Wrong?
- If PYPL remains stagnant or declines, the spread may lose value, but the risk is capped at the initial premium paid.
- If implied volatility drops, it could reduce the call values, impacting the spread’s potential return.
Adjustments:
- If PYPL nears $90 early, traders could consider closing the spread for a profit rather than waiting for expiration.
- If the stock struggles, rolling the spread to a later expiration or a lower strike could allow for repositioning.
Who This Trade Is For
🔹 Traders who are moderately bullish on PYPL but want defined risk.
🔹 Options traders looking for leveraged upside without outright call exposure.
🔹 Those who prefer a time-sensitive trade rather than a long-term investment.
This isn’t a strategy for ultra-bullish traders expecting an aggressive rally past $100—if that’s your outlook, a long call might be a better choice.
The Trader’s Take (Ava’s Perspective)
A bull call spread is a smart way to play controlled upside, especially in a stock like PYPL, which has room to run but still faces resistance zones. With earnings concerns fading and the company shifting focus to profitability, there’s a solid case for an upside move into Q2.
Would I take this trade? Yes—but I’d watch the $80 level closely. If PYPL clears that resistance, this setup has a strong risk/reward profile. But if it lingers below $75, I'd reassess before committing. Smart traders adapt.
PYPL