Will Wells Fargo Make a Comeback?

Wells Fargo dropped last week, but one investor apparently thinks that it will rebound.

optionMONSTER’s monitoring programs detected the sale of 17.341 November 35 puts for $1.68. An equal number of October 35 puts were bought at the same time for $1.20, but volume was below open interest. This suggests that an existing short position was closed in the front month and rolled forward in time.

The trader probably sold the Octobers before last week’s earnings report, looking for strong results. But the shares fell after revenue missed expectations, and now he or she is now on the hook to purchase shares if they stay below $35. So trader bought them back and sold the Novembers, garnering an additional $0.48 of income while staying in the trade for another month.

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