Advertisement
Australia markets close in 1 hour 1 minute

  • ALL ORDS

    7,800.40
    -98.50 (-1.25%)
     

  • ASX 200

    7,549.30
    -92.80 (-1.21%)
     

  • AUD/USD

    0.6401
    -0.0024 (-0.38%)
     

  • OIL

    84.53
    +1.80 (+2.18%)
     

  • GOLD

    2,398.70
    +0.70 (+0.03%)
     

  • Bitcoin AUD

    97,119.30
    +714.62 (+0.74%)
     

  • CMC Crypto 200

    1,288.57
    +403.03 (+44.37%)
     

  • AUD/EUR

    0.6015
    -0.0016 (-0.26%)
     

  • AUD/NZD

    1.0881
    +0.0006 (+0.05%)
     

  • NZX 50

    11,756.31
    -79.73 (-0.67%)
     

  • NASDAQ

    17,394.31
    -99.31 (-0.57%)
     

  • FTSE

    7,877.05
    +29.06 (+0.37%)
     

  • Dow Jones

    37,775.38
    +22.07 (+0.06%)
     

  • DAX

    17,837.40
    +67.38 (+0.38%)
     

  • Hang Seng

    16,184.02
    -201.85 (-1.23%)
     

  • NIKKEI 225

    37,087.75
    -991.95 (-2.60%)
     

Implied Volatility Surging for Wells Fargo (WFC) Stock Options

Zacks Equity Research

Investors in Wells Fargo & Company WFC need to pay close attention to the stock based on moves in the options market lately. That is because the Apr 17, 2020 $15.00 Put had some of the highest implied volatility of all equity options today.

What is Implied Volatility?

Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

What do the Analysts Think?

Clearly, options traders are pricing in a big move for Wells Fargo shares, but what is the fundamental picture for the company? Currently Wells Fargo is a Zacks Rank #4 (Sell) in the Banks - Major Regional industry that ranks in the Bottom 30% of our Zacks Industry Rank. Over the last 60 days, one analyst has increased the earnings estimate for the current quarter, while four have dropped their estimates. The net effect has taken our Zacks Consensus Estimate for the current quarter from 86 cents per share to 79 cents per share in that period.

ADVERTISEMENT

Given the way analysts feel about Wells Fargo right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.

Looking to Trade Options?

Check out the simple yet high-powered approach that Zacks Executive VP Kevin Matras has used to close recent double and triple-digit winners. In addition to impressive profit potential, these trades can actually reduce your risk.

Click to see the trades now >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Wells Fargo & Company (WFC) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research