Calls lock in the price that traders must pay to buy shares. That can provide major leverage to the stock, but the calls will also lose value if there is no rally.
Wells Fargo shares opened yesterday a high note and remained strong all day. Its stock closed at $31.40, up 3.26 percent on the session.
Callsdominated the option activity in the name, outnumbering puts by about 87,000 to 22,000. The bank’s overall option volume was more than twice its average amount.
—Najarian owns WFC calls.
Additional News: Wells Fargo Growing Through Europe Acquisitions: CFO
Additional Views: Wells Fargo a Good Asset: Warren Buffett
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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC’s “Fast Money” and co-founder of OptionMonster.com.