Wells Fargo & Co (WFC) initiated new options trading today, with notable contracts expiring on October 23rd. A put option at an $88.00 strike price is currently bid at $1.87, allowing investors to potentially purchase shares at a lower cost basis of $86.13, compared to the current market price of $89.49. This represents an approximate 2% discount, with a 59% chance of the contract expiring worthless.
Additionally, a $90.00 strike call option is trading at $1.93. If shares are bought at $89.49 and the option is exercised, investors could see a total return of 2.73% at expiration. The current probability of this call expiring worthless is 49%, which would allow investors to retain both their shares and the premium collected.
Implied volatility for the put option stands at 31%, while the call option has an implied volatility of 30%. Actual trailing twelve-month volatility for Wells Fargo is calculated at 26%.
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