I opened a buy/write position on WFC.
music selection: “Sunshine” — Jonathan Edwards
Wells Fargo is showing strong bottom line numbers. Management has been remade with people from outside the company, including new board members. WFC is climbing slower than its peers because it is legally forbidden to grow its assets above 1.95 trillion until the SEC blesses their management transformation. This has created a company that is focused on free cash and positioning itself for growth once the restrictions are finally lifted. In the meantime, they are flush with cash for buybacks. I think the company has a bright future and it is still showing elevated options premiums indicating a good time for a cash secured put or covered call. I am going with the call in hopes of collecting some dividends as well.
I used a combo order to buy 200 shares are 45.03 and simultaneously sold two contracts at the 45 strike and 21MAY2021 expiry for 1.32 a share. The trade will be in force for about 24 days and has an expected yield of 42.83% annualized. If shares fall below 45 at expiry, I will write more calls. If shares are called away, I will probably be done with the trade – at least long enough to avoid the wash sale rule on the 3 cents of short term capital loss I will incur.
Devour your prey raptors!