Online auction platform eBay (EBAY) is up 52% over the past year, far outperforming the overall market. One trader sees shares continuing higher into the spring.
That’s based on the March 2025 $70 calls. With 100 days until expiration, 4,414 contracts traded compared to a prior open interest of 109, for a 41-fold rise in volume on the trade. The buyer of the calls paid $2.55 to make the bullish bet.
eBay shares recently traded for about $65.50, so the stock would need to rise by $4.50, or about 7%, for the option to move in-the-money. The strike price of the option is just over the stock’s 52-week high of $67.80.
eBay has had a mixed year. Revenues are up 3%, but higher costs have led to earnings growth shrinking by 50%. Even with those returns, profit margins are an attractive 20%, and shares still trade at a big discount to the overall market at 12 times forward earnings.
Action to take: With eBay still trading at a relative value and trending higher, both value and momentum investors may like shares here. The stock can likely continue higher into early next year. Plus, at current prices, eBay pays a 1.7% dividend.
For traders, the March 2025 $70 calls are attractive for a continued momentum higher into early next year. Given the current price, traders can likely see mid-double-digit returns on the trade before expiration.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.