Bought +1 COF 100 SEP 09 35 PUT @1.90, Mark 35.89
My limit order was executed at the open today for Capital One Financial (COF). I placed this yesterday at the close and totally forgot about it…
While we are testing a long term resistance (Figure 1, pink trendline at top of chart) at about $36, there is no confirmation yet. The recent bullish momentum could very well sweep COF along to break it.
On the other hand, a look at S&P normalized by US Dollar Index shows the market is also pushing up against a significant resistance. I will make another post about this after the close today as a market analysis.
Thirdly, the divergence in sentiment based on high yield stocks or junk bonds v. market price is as obvious as ever. Although this has been the case for a while now, so this perspective doesn’t hold much weight anymore. The market simply can be irrational beyond anyone’s guess.
Entry: $35.89
Stop: Above $35.00, by next Tuesday.
Target: $33, by next week.
I’ve updated my risk metric for options to incorporate the time parameter. A more thorough analysis can be gleaned from Figure 3 with the expected value of the options at 1, 2, and 3 weeks from now.
To be more precise, the Profit/Loss on August 28 is -$41.5 if COF = $36, and +$110.6 if COF = $33.
So the Reward / Risk = $110.6 / $41.5 = 2.7 < 5. The R/R is predictably horrible. That’s why I’m setting a tight stop on this. We’ll see how today’s push higher plays out and I’ll probably ditch this sooner to minimize my risk.
Capital One Financial
Capital One Financial
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