Options Trading News

August 2, 2013  Fri 3:47 AM CT

Wells Fargo traded near all-time highs yesterday, but a bearish strategy topped yesterday's option activity in the bank.

optionMONSTER systems show that a trader bought 6,048 August 39 puts for the ask price of $0.04 and sold the same number of August 46 calls for the bid price of $0.07. The volume was higher than the previous open interest at each of these out-of-the money strikes, indication new positioning.

This could be an outright bearish combination trade, with puts gaining in value while the calls dwindle if the shares fall sharply. Alternatively, the trade could also be a collar on long shares, which would protect the position on a drop below $39. (See our Education section)

WFC was up 1.75 percent to $44.26 yesterday, not far from its all-time high of $44.79 reached last week. Shares were below $39 in mid-May and at support around $36 in April.

More than 56,000 WFC options traded in the name yesterday, twice its daily average for the last month.
Share this article with your friends


Premium Services

Education & Strategy

The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

View more education articles »