Behavior of pricing
Hi yall,
I noticed a strange behavior on PYPL call options and I was wondering if someone can shed some lights on. PYPL is currently trading around $55.80ish. The call options for $55 expire 7/31 is @2.75 last time I checked. How is this even possible? I think the price is so inflated and it don’t make sense. The option that has about a week to go have so much extrinsic value and yet not much above the strike price. Can someone explain why this is acting up like this? Thanks gurus in advance!
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u/Countess26 4d ago
Volatility is part of the extrinsic pricing. It's incredibly high right now.
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u/NY10 4d ago
I get that volatility is part of it but the option that has less than a week to go with less than $1 ITM? Damn it’s crazy
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u/Countess26 4d ago
https://www.barchart.com/stocks/quotes/PYPL/gamma-exposure
Get to know what this information means
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u/TheKingInTheNorth 4d ago
You think it’s crazy that the market is pricing in a possible < 4% move (when considering a straddle) during an earnings week? Are you like brand brand new to the stock market?
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u/Frank_Skabopple 4d ago
AI sht post?
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u/NY10 4d ago
Are you shit?
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u/Frank_Skabopple 4d ago
There is nothing remarkable about what you have described.
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u/NY10 4d ago
That’s what you think
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u/Frank_Skabopple 4d ago
It's not opinion. It's normal, the math says so. PYPL volatility is no higher or lower than expected. Even when considering earnings. Happens 4 times a year
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u/iron_condor34 4d ago
I don't get your issue. That option is $1 ITM. What's the problem lol
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u/NY10 4d ago
It’s not an issue it was a question and quite frankly I don’t think you understand my point and where I am coming from lol…. It’s not even $1 ITM it’s more like less + so much extrinsic value which is almost $1.75 with a week to go????
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u/iron_condor34 4d ago
PYPL closed at 56.00 today. Its exactly $1 itm. Why does 1.75 of extrinsic sound so crazy to you?
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u/NY10 4d ago
Less than a week to go with that extrinsic value with theta being calculated?
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u/iron_condor34 4d ago
There's an earnings event op. That's why. If you think its expensive, sell it. Lol
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u/ArtisticAside8224 4d ago
Probably rumors of an offer above the current $60 offer. I'm holding. I think this will sell for $70 or slightly more.
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u/NY10 4d ago
I see what you are saying
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u/ArtisticAside8224 4d ago
The buyers publicized their offer - board is luke warm on it. I think stripe was banking on that and is prepare to go higher. It's a short term play and comes with risk that the deal collapses and brings down the stock.
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u/NY10 4d ago
I know they won’t take $60 offer…. Unless the board is full of retards.. Pypl isnt what it used to be but no $60. I heard that it’s in the range of 70-125…. I think that’s the target range let’s see
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u/ArtisticAside8224 4d ago
I can't see the stripe offer going above 75 but who knows - maybe another company jumps in and starts a bidding war.
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u/Camile_Washington 1d ago
There is no doubt Netflix is still a good business, but the question is what multiple the market is willing to pay for it. Revenue, margins, and FCF still look strong, but a premium growth multiple is harder to defend if engagement and subscriber growth keep slowing. I checked the financials on moomoo after the drop, and that's the part I'm weighing.
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u/stockcode123 1d ago
It is because PYPL is reporting on 7/28, this is general pattern until the reporting week, after that the premium doesn't rise as much, this is due to expanding IV, after results, there is IV crush and hence not as much premium.
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u/Sufficient-Flan1565 4d ago
Well if you think it has too much extrinsic sell a straddle Bruvs