For Whom The Wells Tolls

Wells Fargo jams nearly 426 million shares down investors' throats, and yet the stock ekes out a tiny gain. That optimism was echoed in the options market, too, with both puts and calls seeing heavy activity.

Most of the action was in the January expiry, with one of the more interesting trades centering around a risk reversal. In this strategy, one investor sold the January 21-strike put for about $0.15 and used the money to buy the January 27.5-strike call for about $0.50, net-net paying a total of $0.35 for a structure that gets you long Wells Fargo if the stock is below $21.35 or above $27.85 by January expiration.

Still, some market participants remain unimpressed by today's action.

"Wells is not making money on an operating basis," said Paul Miller, managing director over at FBR Capital Markets (Underperform). "Most of their gains are from trading, and if rates ever go up, they could be in a precarious position."

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