Investors in Capital One Financial Corp (COF) are now trading new options set to expire on July 17, 2023. The put contract at the $170.00 strike price has a current bid of $4.00, representing an 8% discount from the current share price of $185.15. If an investor sells-to-open this put, their effective cost basis would be $166.00 per share. Current data indicates a 74% probability that this put contract could expire worthless, potentially providing a 2.35% return on the cash commitment or 13.42% annualized.
On the call side, the $190.00 strike price call option is currently bid at $6.00. Should an investor purchase COF shares at $185.15 and sell this call, the total return could be 5.86% if the stock is called away by expiration. The likelihood of this call expiring worthless stands at 54%, meaning the investor could retain both their shares and the premium collected, amounting to a potential 3.24% return, or 18.48% annualized.
Implied volatility for the put is at 38%, while the call has an implied volatility of 32%. The actual trailing twelve-month volatility, calculated over the last 251 trading days, is 31%.
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