NEW DIRECTIONAL CALL PLAYS
Capital One Financial - COF - close: 77.75 change: +0.56
Stop Loss: 74.95
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Time Frame: 8 to 12 weeks
New Positions: Yes, see below
Why We Like It:
COF is in the financial sector. The company provides financial services and products in the United States, United Kingdom and Canada. They're probably best known for the Capital One credit cards.
The financial sector took a leadership role in today's widespread market rally. The group has been lagging the big cap indices the last few weeks. If financials resume their up trend it's going to be a rising tide that helps lift shares of COF to new highs.
Financials should also benefit from the big picture view that interest rates will rise. Some of the federal reserve governors have been hinting that the Fed may have to raise rates sooner than expected. If rates do start rising then investors could start buying financials ahead of this trend.
Credit card companies are also showing strength in their loan quality. COF said their charge off rates have been dropping (losses from unpaid loans).
Technically shares of COF have a long-term bullish trend of higher lows and it's about to breakout past resistance and hit new multi-year highs. The point & figure chart is already bullish and suggesting an $83 target.
The January 2014 high was $78.49. We are suggesting a trigger to buy calls at $78.75.
Trigger @ $78.75
- Suggested Positions -
Buy the Sep $80 call (COF140920C80) current ask $1.97
Option Format: symbol-year-month-day-call-strike
Entry on May -- at $---.--
Average Daily Volume = 3.0 million
Listed on May 27, 2014