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Most Active Options Update: Wells Fargo & Co (WFC)

WFC is seeing notable options trading today

by 8/14/2013 3:56 PM
Stocks quoted in this article:

The 20 stocks below have attracted the highest options volume -- in the front three-months' series -- during the past 10 trading days. The companies highlighted are those that are new to the list since the last time the study was run. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. Three names of notable interest this afternoon are Wells Fargo & Co (NYSE:WFC), Cisco Systems, Inc. (NASDAQ:CSCO), and Facebook Inc (NASDAQ:FB).

CSCO option volume is accelerated today, ahead of the tech titan's turn in the earnings confessional this evening. At last check, both calls and puts were trading at more than four times the average intraday volume. Meanwhile, FB options have been targeted by a number of spread strategists. The social networking concern made headlines yesterday, after announcing it will provide more transparency in regard to its traffic. Elsewhere, here is a quick look at the interesting activity in WFC's options pits.

Most

Call volume is accelerated in Wells Fargo & Co's (NYSE:WFC) option pits today, with contracts trading at a 90% mark-up to the stock's average intraday volume. However, most of the session's activity has centered on the October 45 call, where 100% of the 29,154 contracts traded have done so on the bid side. All but 2,434 of these crossed in one block trade below the bid price for $0.64 per contract. Volume is easily outstripping open interest, making it safe to assume that the majority of the day's activity is of the sell-to-open variety. Ideally, WFC will remain south of $45 over the next two-plus months, allowing the options to expire worthless, and the trader to pocket the initial credit as her full potential reward on the play. The equity recently rallied to an all-time peak of $44.78 on July 23, but has since pared a portion of these gains to linger near $43.26. As such (and as suggested by Trade-Alert), today's activity could also represent a options-related support, in which a shareholder sells calls to protect against any potential downside, or earn some extra cash on her stock position. It bears mentioning that WFC has never traded north of $45 (on a split-adjusted basis).

Looking elsewhere, one discovers that writing calls has been a popular strategy in WFC's options pits. During the past 20 sessions, specifically, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have sold to open 1.24 times as many WFC calls as they've purchased.


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