Posted in Options 
November 3rd, 2009

Wells Fargo & Company (NYSE: WFC) has seen a flurry of PUT OPTIONS activity today.  It has traded about 123,000 puts and 17,589 calls as of 11:20am, with put volume nearly 3X average daily volume already.  Of this volume more than 75% of it has been bought at the offer, bearish bets.  The majority of the volume is due to large ratio put spreads in January, as the $26/$21 ratio put spread is being bought, 31,000 $26 puts against 62,000 $21 puts.  The action comes a day after large bearish bets were being made in June for the Financials (XLF), of which Wells Fargo is a large component.  The main worry with Wells Fargo is that it will need to raise capital in the near future as it is attempting to rely on earnings to repay the TARP.  The Company will be presenting this Friday in Boston at 10am at the Bank Analysts Association.  The ratio put spread is also a bet against volatility, although Wells has traded in a very tight range for months and is already less volatile than its counterparts.

-JOE KUNKLE, OptionsHawk.com

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