New Options Trading Opportunities for Capital One Financial Corp
Investors in Capital One Financial Corp (Symbol: COF) noticed new options starting trading today, with an expiration date of December 6th. At Stock Options Channel, our YieldBoost formula has examined the COF options chain and highlighted one put and one call contract that stand out.
Put Contract Details
The put contract at a $150.00 strike price has a current bid of $4.50. If an investor sells to open this put contract, they agree to buy the stock at $150.00. By doing this, they collect the premium, making their effective cost basis $145.50 per share (excluding broker commissions). For someone looking to buy shares of COF, this could be a better deal compared to the current price of $154.51 each.
This $150.00 strike price is close to a 3% discount from the current trading price, meaning it is out-of-the-money by that percentage. There’s a chance the put contract could expire worthless, with current analytics suggesting a 62% likelihood of this happening. Stock Options Channel will monitor and update these odds on our website under the contract detail page. Should the contract remain inoperative, the premium would yield a 3.00% return on the cash commitment, equivalent to an annualized 25.44% — this is known as YieldBoost.
Examining the Stock’s Historical Performance
Below is a chart highlighting Capital One Financial Corp’s trading history over the past twelve months, with the $150.00 strike price clearly marked:
Call Contract Insights
On the call side, the contract with a strike price of $157.50 has a current bid of $5.60. If an investor decides to buy COF shares at the current price of $154.51 and sells to open this call contract as a “covered call,” they would agree to sell at $157.50. By collecting the premium, the investor could see a total return of 5.56% if the stock is called away on December 6th (before broker commissions). However, significant gains could be lost if COF stock increases significantly, highlighting the need to study both the recent trading history and the company’s fundamentals.
Here’s a chart showing COF’s twelve-month trading history, with the $157.50 strike price marked in red:
The $157.50 strike price represents a roughly 2% premium over the current trading price, indicating it is out-of-the-money by that percentage. This means the covered call may also become worthless, allowing the investor to retain both their shares and the premium collected. Current analytics show a 52% chance this will happen. Stock Options Channel will track these odds, along with the trading history of the option, on our website. If the covered call expires worthless, the premium would effectively provide a 3.62% additional return or an annualized 30.74% — referred to as YieldBoost.
Volatility Metrics
The put contract’s implied volatility stands at 42%, while the call contract’s implied volatility is at 41%. Meanwhile, the trailing twelve-month volatility, based on the last 251 closing values plus today’s price of $154.51, calculates to 27%. For more ideas on put and call options contracts, visit StockOptionsChannel.com.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
