NatWest released its full-year results after announcing the £2.7bn purchase of wealth manager Evelyn Partners earlier this week. The shares fell to their lowest level since October 2025 and tested the 200-day SMA, after starting February above 700p. Net interest income rose 13.8% year on year to £12.8bn, while total income increased 13.2% to £16.64bn. Total profits climbed 21.3% to £5.83bn, even though annual impairments jumped 86.9% to £671m. Net interest margin rose 21bps to 2.34%, despite a lower rate environment. For 2026, NatWest expects total income of £17.2bn to £17.6bn and ROTE above 17%. A final dividend of 23p per share took the total dividend for the year to 32.5p, up 51% on 2024. The share price drop has been linked to concerns about the Evelyn Partners deal and smaller share buybacks. There is a clear gap between NatWest’s strong results and its current share price, which has fallen to the 200-day moving average. When solid fundamentals clash with negative sentiment, it can create opportunities in the derivatives market. Here, the slide looks driven by short-term worries that the Evelyn Partners deal will reduce buybacks. The bank’s 2026 guidance is very strong, with a Return on Tangible Equity (ROTE) target above 17%. For context, in 2023 and 2024, major UK banks often struggled to stay consistently above 12–14% ROTE. That makes NatWest’s target stand out. Markets also tend to punish big acquisitions in the short term, as happened with several large financial mergers in the early 2020s. If a trader thinks this sell-off is an overreaction, one approach is to sell out-of-the-money puts with strike prices near or below the October 2025 lows. This collects premium while relying on the view that the earnings report and guidance will support the share price. The aim is for the options to expire worthless if the stock stabilises and rebounds. This situation has likely lifted implied volatility in NatWest options. Higher volatility usually means higher option premiums, which can make strategies like cash-secured puts or bull put spreads more appealing in the coming weeks. In simple terms, traders may be paid to wait for sentiment to catch up with the company’s performance. More aggressive traders could consider buying call options, aiming for a sharp reversal once the market focuses less on buybacks and more on the long-term value of the wealth management acquisition. A bounce from a key level like the 200-day SMA—especially after strong results—can happen quickly. This approach would benefit from a move back towards the 700p level seen earlier this month.

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