Kevin Kelly's Paypal Options Trade

Speaking on Bloomberg Markets, Kevin Kelly of Recon Capital Partners recommended a long position in Paypal Holdings Inc PYPL.

He wants to buy the stock and sell the January 2018, 47 strike call against it. He can sell the call for a premium of $2.10, which is equal to a 5 percent yield and it lowers the cost basis for the long stock position. If Paypal jumps above $47, Kelly is going to have to sell the long stock position for $47.