4 Trade Ideas for Capital One: Bonus Idea

Here is your Bonus Idea with links to the full Top Ten:

Capital One Financial, $COF, found support after falling through the 200 day SMA in August. It moved back higher in September but could not hold up, falling back to the same support area, just under the 200 day SMA. A second attempt to move higher broke to a new high and kept running in November. It eventually met resistance in December and pulled back. After making a higher low it reversed again ad ran to a new high 2 weeks ago. But it has pulled back since and comes into the week at prior support.

The Bollinger Bands® are open to allow it to move lower. The RSI is falling and on the edge of moving into the bearish zone while the MACD is dropping and about to turn negative. There is support lower at 99.50 and 98 then 96 and 94.50 before 91.25 and 88.40. Resistance above comes at 102.40 and 105 then 106.75. Short interest is low at 1.1%. The stock pays a dividend with a yield of about 1.60% and starts trading ex-dividend on Friday. The company is expected to report earnings next on April 23rd.

The February options chain shows the largest open interest at the 97.50 and 97 puts, then the 105 and 101 calls. In the March options the biggest open interest on the put side comes from the 90 to 100 strikes. On the call side it is biggest at 105 and tails to 115. The May options, covering the earnings report date, show biggest open interest at the 60 put strike, then 100. On the call side it is much bigger and found at 110 then 105.

Capital One Financial, Ticker: $COF

Trade Idea 1: Short the stock on a move under 99.50 with a stop at 101.

Trade Idea 2: Short the stock on a move under 99.50 and add a February 14 Expiry 101 Call ($1.28).

Trade Idea 3: Buy the February 99/97/96 broken wing Put Butterfly (67 cents).

Trade Idea 4: Buy the February 99/94-March 90 1×2 Put Spread (65 cents, buy Feb 99 and sell both Feb 94 and Mar 90).

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After reviewing over 1,000 charts, I have found some good setups for the week.  These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with the first month of the year in the books, saw equity markets had finally stalled and started to retrace after a long strong run in the 4th Quarter and into January.

Elsewhere look for Gold to continue to move higher while Crude Oil tests the lower end of a broad consolidation channel. The US Dollar Index looks better to the downside while US Treasuries head towards the all-time highs. The Shanghai Composite looks to re-open with a bias lower compounded by a week of pent up news while Emerging Markets continue a short term downtrend.

The Volatility Index looks to remain elevated making the path easier for equity markets to the downside. Their charts also look weak on the shorter timeframe with the IWM the ugliest and the SPY now at possible support. Only the QQQ remains near the 20 day SMA. The longer timeframe looks much less concerning for the QQQ and SPY. The IWM is weaker but at support on this timeframe. Use this information as you prepare for the coming week and trad’em well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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