Wells Fargo Stock Lower After Analyst Cuts Rating

WFC options can be had at a discount, though

Managing Editor
Sep 7, 2018 at 2:08 PM
facebook X logo linkedin


Earlier this morning, brokerage firm Macquarie chimed in on Wells Fargo & Co (NYSE:WFC), downgrading the banking name to "neutral" from "outperform." The analyst in coverage cited concerns over the company's valuations, noting it prefers sector peer Bank of America (BAC). In response, WFC is down 1% to trade at $57.44.

Wells Fargo stock is now headed toward its third straight losing week. Today's pullback takes the shares below their 40-day moving average, a trendline that had served as support since late June. On the charts, WFC had rallied off its mid-April lows near $50, but breakout attempts have been thwarted by the $60 level. 

Daily Stock Chart WFC

There is still room for more analysts to step to the sidelines. Of the 24 brokerages covering WFC, nearly half still rate it a "buy" or "strong buy." Further, the stock's consensus 12-month price target of $62.31 is an 8% premium to its current perch.

In the options pits, WFC puts have become more popular lately, as evidenced by data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which shows the security with a 10-day put/call volume ratio of 0.85, in the elevated 85th annual percentile. This means that although options traders still lean toward calls on an absolute basis, Wells Fargo puts have been purchased relative to calls at a faster-than-usual clip during the past two weeks. 

Echoing this, the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.04 ranks 4 percentage points from an annual high. This shows that short-term traders have rarely been more put-heavy toward the security in the past year. Digging deeper shows the September 60 put saw the largest increase in open interest during the past two weeks, with nearly 10,000 contracts added.

The good news for options traders is that short-term options are attractively priced right now. WFC's Schaeffer's Volatility Index (SVI) of 19% is in the 11th percentile of its annual range, suggesting near-term options are pricing in relatively low volatility expectations.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI