The bank's fourth-quarter profits also missed estimates
Capital One Financial Corp (NYSE:COF) shares are down 4.2% to trade at $225.61 at last glance, after the bank's fourth-quarter profits missed estimates. The company also revealed it will buy startup Brex for $5.15 billion. In response, the stock attracted three price-target cuts, including one from Deutsche Bank to $256 from $264.
The majority of analysts are still bullish on COF, with 18 of the 22 in question sporting a "buy" or better rating. What's more, the 12-month consensus target price of $278.91 is 24.2% premium to current levels, indicating more bear notes could be on the horizon.
Despite today's losses bringing shares to their lowest level since December, they still sport a 23.5% nine-month lead. The security has taken a step back from its Jan. 6, all-time high of $259.63, breaking below the 100-day moving average that provided support for a pullback earlier this month.
Options volume is already running at triple the amount typically seen at this point, with 12,000 calls and 8,023 puts traded so far. The most active contract is the weekly 1/23 232.50-strike call, with new positions being sold to open there.
Now is a good time to load up on options, which are affordably priced. This is per Capital One Financial stock's Schaeffer's Volatility Index (SVI) of 33% that ranks higher than just 16% of all other readings from the past year.