The stock traded more than three times its average daily volume on Wednesday. “Currently, the options are implying about a 3.8% [rise] going into earnings this week,” Zhang said.
There was a buyer of 27,720 of the February 57.5 calls at an average price of $1.54 per contract. This accounted for almost 20% of the total contracts traded Wednesday, Zhang said. They sold an old contract for $7.7 million and invested $4.6 million into the new trade, he added. This trader expects shares of Wells Fargo to spike at least 4.5% by February expiration.
The buyer also bought 9,500 of the February 62.5 calls at an average price of 37 cents per contract, Zhang mentioned. This bets the stock will be 11% higher by February expiration, he added.