It’s no secret that financial technology (fintech) giant SoFi Technologies (SOFI) has been struggling lately. True, SOFI stock has almost doubled on a year-to-date basis. However, between the close of the Nov. 12 and Nov. 20 sessions, the security dipped roughly 23%. That’s a horrifying figure, especially given the short time period. Still, in the trailing five sessions, SOFI gained about 21%.
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How then should investors treat the fintech specialist? According to the fundamental narrative, the bulls may have more reason to be optimistic. Analysts at JPMorgan (JPM) expect the Federal Reserve to lower the benchmark interest rate by 25 basis points at the conclusion of its December 10 policy meeting. This forecast represents a pivot from the experts’ earlier assessment, which was that the central bank would hold rates steady.
Of course, at least some of the anticipated pivot has been baked into the SOFI stock price, with the fintech gaining more than 4% last Friday. It’s possible that, if the Fed makes it official, SOFI could rise more. Further, additional commentary from Fed policymakers may justify the security’s steady march higher, perhaps back toward $32 and beyond.
To be clear, the above statements reflect hypotheticals, not proven realities. Nevertheless, what’s really intriguing is that, following Friday’s price action, SOFI stock printed an ultra-rare quantitative signal that may imply upside. Below is a quantitative case for why I’m cautiously optimistic about SoFi.
Establishing the Foundation of Trinitarian Geometry
From the outset, it’s important to establish the framework of this article. Unlike most other financial publications, I’m not going to provide a 12-month target. With the equities arena being stochastic, chaotic, heteroskedastic, and reflexive, among many other variable characteristics, it’s impossible for me (at this moment) to provide an empirically cohesive forecast.
Instead, I’m thinking much more short-term — and because of that, I don’t anticipate wholesale changes in the share price. Instead, I’m looking for a couple of percentage points of delta. In this context, it makes sense to consider the leverage of a vertical options spread, where we combine both a debit and credit transactional leg to discount a net long position.
While vertical spreads carry the advantage of capped-risk, capped-reward leverage, these vehicles feature expiration dates and defined profitability thresholds. As such, we need to be precise with our trading methodology, which is why I’ve created a unified model called “trinitarian geometry.”
Specifically, this approach represents a Kolmogorov-Markov framework layered with kernel density estimations (KDE). Essentially, we’re combining probability theory (Kolmogorov), behavioral state transitions (Markov), and calculus (KDE).
In the ontology of market analysis, the ecosystem features uncertainty, behavior, and geometry. In other words, we’re looking to decipher probability, the probability of the likelihood changing, and the “geometry” of that change.
What makes trinitarian geometry complicated is that a stock chart doesn’t naturally lend itself to calculus-driven analysis. As such, we need to rearrange the data through reification and iteration. First, we must treat probability as a physical object so that we can use calculus to measure its properties. Second, to avoid reification, we can’t view a stock as a singular journey across time but rather as segmented across multiple trials.
Trial size is where some subjectivity must enter the framework. Personally, I like using 10-week sequences, though other quantitative analysts may have different temporal preferences. The most important point here is that the iteration process is consistent within the dataset.
Getting Our Hands Dirty with the Math for SOFI Stock
Using the above trinitarian geometry, the forward 10-week returns of SOFI stock can be arranged as a distributional curve, with outcomes ranging between $27.20 and $31.20 (assuming an anchor price of $29.72, Friday’s close). Further, price clustering — where probability mass is greatest — is likely to be concentrated at $29.30, thus indicating a negative bias.
The above assessment aggregates all trials since SoFi’s public market debut. However, we’re interested in a specific signal, the rare 3-7-U sequence; that is, in the past 10 weeks, SOFI stock printed three up weeks and seven down weeks, but with an overall upward slope.
Under this setup, the forward 10-week returns would be expected to range between $15 and $48. Most interestingly, though, price clustering would likely occur at $34.90. This is the reason why calculating the geometry of probability as a physical object is so important. It’s not just about understanding where prices are likely to cluster. Rather, it’s also about where the bias is.
In other words, if the probability mass is “heavier” on the right side, the bulls are more justified in taking risks. If the probability mass is heavier on the left side, then it may mean that the bulls should be less aggressive with their strike prices.
I didn’t derive this data from assuming an arbitrary forward multiple (fundamental analysis), nor would you get it from simply eyeballing the chart (technical analysis). You need a unified calculus that integrates multiple mathematical theories into a cohesive system.
With all that said, I’m a fan of the 30/31 bull call spread expiring January 16, 2026. This trade involves two simultaneous transactions: buy the $30 call and sell the $31 call, for a net debit paid of $47 (the maximum possible loss). Should SOFI stock rise through the second-leg strike of $31 at expiration, the maximum profit is $53, a payout of almost 113%.
Sure, you could go for the higher-strike spreads as probability mass is greatest at nearly $35. However, because of the rarity of the 3-7-U signal, I simply don’t have the greatest of confidence. Therefore, I believe the $31 strike is the most reasonable idea.
Wall Street’s Take on SOFI Stock
Turning to Wall Street, SOFI stock has a Hold consensus rating based on five Buys, seven Holds, and four Sell ratings. The average SOFI price target is $27.27, implying ~7% downside risk over the next 12 months.
Combining Narratives with Quant Reasoning to Trade SOFI Stock
Amid rising expectations of a Fed rate cut in December, sentiment for SoFi Technologies has improved dramatically, helping it recover from its recent slump. With SOFI stock also printing a rare quantitative signal, the overall perspective looks bullish for speculators. While the fintech specialist is still risky, we can use trinitarian geometry to formulate the best plan of attack.