Our WFC puts for the July 29, 2022, expiration cycle are essentially worthless. As a result, I want to buy back our WFC July 29, 2022, 35 puts for $0.02, lock in a decent profit and immediately sell more premium. I’m only going out 29 days to the August 19, 2022, expiration cycle. I’ll sell even more put premium in September if all goes well.
Wells Fargo (WFC)
IV: 35.1%
IV Rank: 17.9
Expected Move (Range): The expected move (range) for the August 19, 2022, expiration cycle is from roughly 40 to 46.
With WFC trading for 42.91 I want to sell puts at the 39 put strike, just below the expected move, going out 29 days for roughly $0.46, if not higher. Of course, due to a wide variety of factors, prices may and most likely will vary slightly.
Here is the trade:
Buy to close WFC July 29, 2022, 35 calls for $0.02
Once that occurs (or if you are new to the trade):
Sell to open WFC August 19, 2022, 39 put strike for a total of $0.46 or higher (As always, prices will vary, please adjust accordingly).
Delta of short put: 0.18
Probability of Profit: 79.10%
Probability of Touch: 40.44%
Total net credit: $0.46
Max return (cash-secured): 1.18%
Risk Management
I will be using WFC as part of our Income Wheel Portfolio, so if WFC closes below our put strike at expiration we will be issued shares at the 39 strike and begin the process of selling calls against our newly acquired shares. Until that point, we will repeatedly sell puts on WFC. Of course, any necessary trade alerts/updates will follow.