I have both a yubikey and an auth app but can't seem to find a way to use them with paypal. Do you have some kind of special account or is that a feature bound to a certain market?
I don't have my password handy right now so I can't login to check, but look for settings related to their "security key". I don't know if they still do or not but at one point they offered a hardware OTP generator (similar to the old RSA SecurID key fob) for a one-time $5 fee. Alternatively, you could use an existing one you already had just by entering its "ID number"; I used the IDs of my Symantec VIP Yubikey and also the app.
Sorry I can't be more specific or give you better guidance. I know that the option does exist, though; perhaps just explore the available options and maybe you'll stumble across it. Good luck!