Wells Fargo & Company (WFC) Call Buyers Busy Ahead of Earnings

Wells Fargo & Co (WFC) will report earnings tomorrow morning


Published on Apr 13, 2015 at 3:03 PM
Updated on Apr 20, 2015 at 5:32 PM

Wells Fargo & Co (NYSE:WFC) calls are popular this afternoon, ahead of the financial firm's first-quarter earnings report tomorrow morning. Specifically, the contracts are running at 1.2 times the usual intraday rate, and more than double the number of puts on the tape.

Short-term traders are targeting the April 55 call, where data suggests some new positions are possibly being purchased. In short, these potential call buyers are banking on WFC to top $55 by week's end, when front-month options expire.

However, the shares aren't used to seeing post-earnings upside recently. In the session following the firm's last three turns in the confessional, WFC has slipped 1.5%, on average. As such, delta on the near-the-money call is just 0.39, or 39%.

While short-term traders today are call-skewed, the opposite is true, speaking more generally. WFC's Schaeffer's put/call open interest ratio (SOIR) of 1.15 ranks in the 69th annual percentile, indicating put open interest actually outweighs call open interest by a wider-than-usual margin, among options expiring in the next three months.

On the charts, Wells Fargo & Co (NYSE:WFC) is sitting on a lead of 0.5% this afternoon at $54.58. Longer term, though, the shares remain in negative territory since the start of the calendar year, and have been seesawing around their 100-day moving average in recent weeks.

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