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."

Questions, comments send them to us at: optionsaction@cnbc.com

Latest Video


Host Bio

  • Melissa Lee

    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

Options Action Traders

From Our Sponsor

Options Action Newsletter:

Sign up to receive exclusive Options Action content. Each month you'll receive an exclusive message from host Melissa Lee and insight directly from one of the members of our Options Action panel. Keep your pulse on the market with the Options Action newsletter.

Please enter a valid email address
To learn more about how we use your information, please read our Privacy Policy.