WFC Analysis

Wells Fargo & Co. (WFC)

Update 7/14/2017: WFC gapped $2 to the downside at the opening bell and then worked its way up during the day, reaching my target with 20 minutes left before the closing bell. I exited at 24.8% of maximum potential profit. 

Shares showed a net decline during my one-day holding period , or a -109% annual rate. The options position produced a 33.0% yield on debit for a +12,033% annual rate.

WFC publishes earnings on Friday before the opening bell.

I shall use options that trade for the last time eight days hence, on July 21.

Implied volatility stands at 21%, which is 1.8 times the VIX, a measure of the volatility of the S&P 500 index.

WFC’s IV stands in the 36th percentile of its annual range and the 59th percentile of its most recent broad movement.

The price used for analysis was $55.39.

Premium: $1.21 Expire OTM  
WFC-iron fly Strike Odds Delta
Long 58.00 92.5% 8
Break-even 56.71
Short 55.50 54.3% 47
Short 55.50 45.7% 53
Break-even 54.21
Long 53.00 87.8% 11

The premium is 48% of the width of the position’s wings.

The risk/reward ratio is 1.1:1.

Decision for My Account

I have entered an order on WFC as described above. The stock at the time of entry was priced at $55.35.

By Tim Bovee, Portland, Oregon, July 13, 2017


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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