http://www.nytimes.com/2016/09/09/b...rgo-fined-for-years-of-harm-to-customers.html https://www.bloomberg.com/gadfly/ar...ffett-s-silence-on-wells-fargo-speaks-volumes http://stockcharts.com/h-sc/ui?s=wfc Trade: With WFC at 46.96 Jun '17 55/60 bear call spread for a net credit of $45 Yield = 45/455 = 9.9% in 276 days or 13.1% annualized Prob = 82.8% Expectation = .83(45) - .07(455) - .1(228) = 37.4 - 31.9 - 22.8 = -17.3 Price........ Profit / Loss........ ROM % 35.22.............. 45.00.............. 9.90% 45.00.............. 45.00.............. 9.90% 50.00.............. 45.00.............. 9.90% 55.00.............. 45.00.............. 9.90% 55.45................ 0.00.............. 0.00% 58.93............ (347.70)......... -69.54% 60.00............ (455.00)......... -90.10% 65.00............ (455.00)......... -90.10% 75.00............ (455.00)......... -90.10%
http://finance.yahoo.com/news/wells-fargo-wfc-troubles-deepen-205808531.html http://stockcharts.com/h-sc/ui?s=wfc
?????????? http://stockcharts.com/h-sc/ui?s=wfc What are you hypothesizing? It would seem to me to take a reality inversion for that trade to be successful.
Frankly I didn't know what I was doing either. My thought was: if I am a contrarian and think WFC's drop is market overreaction, that the stock price will move back up in the near future, why don't I go bullish and do a bull spread? If I were to bet against the market, what is the best approach?
http://stockcharts.com/h-sc/ui?s=wfc With WFC at 45.31 Trade 1 Jan '17 43/46 bull call spread for a net debit of $187 Yield = 113/187 = 60.47% in 114 days Price............ Profit / Loss ............ROI % 32.25............... (187.00)............ -100.00% 37.10............... (187.00)............ -100.00% 42.20............... (187.00)............ -100.00% 43.00............... (187.00)............ -100.00% 44.87.................... 0.00.................. 0.00% 46.00................ 113.00................. 60.43% 47.30................ 113.00................. 60.43% 52.40................ 113.00................. 60.43% 57.50................ 113.00................. 60.43% Trade 2 Jan '17 45/48 bull call spread for a net debit of $130 Yield = 170/130 = 131% in 114 days Price.............. Profit / Loss........... ROI % 33.75................. (130.00)............ -100.00% 38.79................. (130.00)............ -100.00% 44.09................. (130.00)............ -100.00% 45.00................. (130.00)............ -100.00% 46.30...................... 0.00.................. 0.00% 48.00................... 170.00............... 130.77% 49.39................... 170.00............... 130.77% 54.70................... 170.00............... 130.77% 60.00................... 170.00............... 130.77% Both trades hypothesize we have bottomed and there will be a bounce. A very minimal one in trade #1, a larger one in trade #2. Some people will see the previous bottoming on June 27 as support for the bottom hypothesis... the bounce is pure speculation. Here's a different bottom based trade: Jan '17 40/36 bull put spread for a net credit of $34 Yield = 34/366 = 9.3% in 114 days Price.............. Profit / Loss........ ROM % 27.00................. (366.00)............ -91.50% 32.69................. (366.00)............ -91.50% 36.00................. (366.00)............ -91.50% 38.68................... (98.50)............ -24.63% 39.66...................... 0.00................ 0.00% 40.00..................... 34.00............... 9.30% 44.66..................... 34.00............... 9.30% 50.65..................... 34.00............... 9.30% 56.64..................... 34.00............... 9.30% no bounce is necessary, a little bit of down drift would be accommodated. I haven't computed any prob or expectation as these calculations are especially inappropriate at this juncture for this stock.
Thanks for the suggestions. Of course I have the luxury of waiting to see how things would unfold. However, just my casually looking at the prices, there seemed to be support at ~$45. Also, at $45 PE is ~11.2, on the low side for this stock. Disclosure: WFC is one of my long term stocks. Regards,
Stumpf testifying again today...not pleasing The House or investors. http://stockcharts.com/h-sc/ui?s=wfc http://www.msn.com/en-us/money/tops...-goals-that-caused-all-the-trouble/ar-BBwMYPH http://www.msn.com/en-us/money/tops...ns-banks-its-time-to-break-them-up/ar-BBwNgwC WFC getting help from DB to pull market down http://www.cnbc.com/2016/09/29/the-...line|story&par=yahoo&doc=103980410&yptr=yahoo http://stockcharts.com/h-sc/ui?s=db