Bank of America led the way, and now Wells Fargo is following.
BAC was the first major financial to
optionMONSTER's Heat Seeker scanning program and was hugely
profitable in the short term. WFC's activity took a much longer
This time the Heat Seeker showed the purchase of about 19,500
January 2016 45 calls for $4.20. The trader sold a similar number
of January 2015 40 calls for $5.70 seconds later, but that volume
was below previous open interest. This suggests that an existing
position was rolled out in time and up in strike.
lock in the price where a stock can be purchased, letting investors
cheaply position for upside. In the case of yesterday's trade, he
or she collected $1.50 by making the adjustment and now has an
additional year to ride the shares higher. (See our
section for more on how options can be used to manage trades more
WFC rose 1.05 percent to $44.08 yesterday. It broke out to new
all-time highs in May and has been consolidating above those levels
since. Financials have emerged as the strongest sector within the
S&P 500 this week following months of underperformance.
Total option volume was more than twice the daily average in WFC
yesterday, with calls outnumbering puts by a bullish 4-to-1 ratio.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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