Wells Fargo has been getting killed along with other banks, and now one investor is looking for a bounce.
optionMONSTER's Heat Seeker tracking system detected the purchase of 33,400 October 28 calls for $1.09 and the sale of an equal number of October 24 puts for $1.13. Volume was more than triple open interest in both strikes.
The strategy will simulate owning shares in the San Francisco-based lender, making money on a push toward or above $28 and losing below $24. It generated a credit of $0.04 to open.
WFC rose 3.39 percent to $26.22 yesterday but has lost more than 20 percent of its value since mid-February. The company, which relies heavily on its mortgage business, has struggled as home-loan volumes remain weak and legal costs associated with foreclosures mount.
But with the shares back to where they traded in late October, some investors may believe that the stock is attractive again.
The bullish trade pushed total option volume in WFC to almost triple its daily average yesterday.
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