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Wednesday, July 6, 2022

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Bearish Positions On The Rise In Wells Fargo Options


Today’s tickers: WFC, SNE & FRAN

WFC – Wells Fargo & Co. – Put activity on Wells Fargo this morning suggests some traders are positioning for shares in the name to decline next week. The put-to-call ratio on WFC is greater than 9-to-1 at present, with most of the volume building in the June puts with one week remaining to expiration. The stock is currently down 1.0% at $30.86, trading lower along with a number of the other big banks as markets await further news out of Europe. Put volume is heaviest at the Jun. $30 strike where more than 32,000 contracts have changed hands against open interest of 6,877 positions. Traders appear to have purchased most of the $30 puts for an average premium of $0.26 apiece and may profit at expiration if WFC shares decline another 3.6% to breach the average breakeven price of $29.74.

SNE – Sony Corp. – Call buying on the electronics producer this morning appears to be a medium-term bet that shares in Sony Corp. may rebound somewhat during the next four months. Shares in the electronics producer have been hammered this year, selling down to levels last seen in the 1980s. Sony’s shares are struggling again today, slipping 3.75% to $12.81 in the first half of the session. One or more traders driving up volume in October expiry call options are prepared to benefit should the stock reverse course. More than 4,500 calls changed hands at the Oct. $14 strike against open interest of 1,966 contracts. It looks like traders purchased most of the calls for an average premium of $1.08 apiece and stand ready to profit at expiration should Sony’s shares rally 17.7% to top the average breakeven price of $15.08.

FRAN – Francescas Holdings Corp. – Shares in the specialty retailer of women’s apparel and accessories jumped as much as 26.6% today to $28.25 after the company forecast full year profits of $0.89 a share above the consensus estimate of $0.84 a share. Call options purchased on Francescas yesterday have more than doubled in value overnight for at least one strategist that snapped up 120 calls at the Jun. $22.5 strike yesterday for a premium of $1.70 apiece. The sharp move in the stock now has the $22.5 strike call trading at $4.20 per contract. Traders positioning for shares to extend gains in the near term appear to be buying up Jun. $25 and $30 strike calls as well. It looks like 240 of the $25 strike calls were purchased for an average premium of $2.06 apiece, while 350 calls were purchased at the $30 strike at an average premium of $0.25 each. Roughly 3,000 options traded on FRAN by midday, a more than 1300% increase in volume versus the stock’s 90-day average daily volume of 227 contracts.


Caitlin Duffy

Equity Options Analyst

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