Options Traders, HIllary Clinton Target Mylan NV, Wells Fargo & Co

The Street is preparing for Hillary Clinton's diatribe against "bad corporate actors" like Mylan NV (MYL) and Wells Fargo & Co (WFC)

by Alex Eppstein

Published on Oct 3, 2016 at 2:33 PM
Updated on Oct 3, 2016 at 2:50 PM

Democratic presidential nominee Hillary Clinton is expected to take aim at Mylan NV (NASDAQ:MYL) and Wells Fargo & Co (NYSE:WFC) during a campaign speech against "bad corporate actors." The latest round of negative press for the drugmaker and the bank has their respective stocks down in the dumps. At the same time, options volume is accelerated on both MYL and WFC.

Starting with MYL, the shares are off 1% at $37.72, and earlier touched a new annual low of $37.41. As alluded to, the pharmaceutical firm has been embroiled in drug-pricing scandals, centered on alleged EpiPen price gouging.

Meanwhile, the stock's put options are crossing the tape at twice the usual intraday pace. Short-term traders are focused on the weekly 10/7 37.50-strike put, where it seems safe to assume buy-to-open activity is taking place. In other words, these bearish bettors foresee MYL tumbling below $37.50 by this Friday's close, when the weekly series expires.

More generally speaking, though, traders targeting near-term Mylan NV options are more fond of calls than puts. Specifically, the stock's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.52 -- in the low 7th annual percentile -- with calls roughly doubling puts within the front three-months' series.

Turning to WFC, the shares have dipped 1.3% at $43.73, and earlier hit a two-year low of $43.71. Weighing on the stock in recent weeks are revelations of allegedly questionable retail business practices and illegal car repossession.

Amid today's pullback, WFC put options are trading at 1.5 times the expected intraday rate. Leading the way is the weekly 10/14 42.50 strike, but most signs -- including data from the International Securities Exchange (ISE) -- are hinting at sell-to-open action. Assuming this is the case, these put sellers expect the $42.50 level to act as a foothold through next Friday's close.

Demand for Wells Fargo & Co puts has been elevated of late, relatively speaking. The stock's SOIR of 0.89 ranks in the top one-third of all readings taken in the past year, suggesting short-term open interest levels are more put-tilted than usual.

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