Wells Fargo Puts Surge Higher

Wells Fargo & Company (WFC) shares dropped Tuesday after debate on the firm’s outlook escalated. The residential mortgage lender and consumer loan underwriter is being seen in a bearish light by many investors who believe there may be more pain before any gain. Analysts are expecting wide losses for the firm, but others are optimistic about expansion opportunities in the troubled market. Overall, Wall Street appears to be rather indecisive in its sentiment on the company.

A Wells Fargo spokesman was quick to note that Wells Fargo continues to be the only bank in the U.S. to be rated ‘AAA’, continues to grow, has a strong balance sheet, and has the strongest capital ratio in their peer group. The spokesman also said that given the company’s diversification, it continues to perform well during the current economic cycle just as it has endured through all kinds of other economic cycles during its 156-year history.

Wells Fargo options also surged in volume with the September puts being most active. However, some call activity suggesting a straddle position or some bullishness in the stock. The September $25 puts were the most active with 22,281 contracts trading hands today, suggesting a large bet on a decline over the next 30 days. Interestingly, the second largest trade was in the September $30 puts, which saw 10,177 contracts trade hands.

Wells Fargo & Company is a diversified financial services company. It provides retail, commercial and corporate banking services through banking stores located in 23 states: Alaska, Arizona, California, Colorado, Idaho, Illinois, Indiana, Iowa, Michigan, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, Ohio, Oregon, South Dakota, Texas, Utah, Washington, Wisconsin and Wyoming.

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