Trade Alert – (WFC) July 28, 2025 – TAKE PROFITS – SELL

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.

 

Trade Alert – (WFC) – TAKE PROFITS

SELL the Wells Fargo (WFC) August 2025 $65-$70 vertical BULL CALL debit spread at $4.98 or best

 

Closing Trade

7-28-2025

expiration date: August 15, 2025

Portfolio weighting: 10%

Number of Contracts = 25 contracts

We caught the full extent of the recent 10% rally in Wells Fargo (WFC). As a result, the risk/reward of continuing until the August 15 option expiration in 15 trading days is no longer favorable. Better to raise dry powder with which to take advantage of any future selloffs.

As a result, you get to take home $9.50 or 8.26% in 8 trading days. Well done, and on to the next trade.

This was a conservative trade in one of the most successful sectors in the market. I don’t normally buy stocks short of all-time highs, but in (WFC)’s case, I will make an exception.

Interest rate stocks are finally starting the move after being beaten senseless for the past nine months. The market is starting to discount the appointment of a new Fed governor in May. The president has promised to cut interest rates by 300 basis points with his next appointment. This would be a boon to banks.

US Treasury bonds are approaching their lows for the year (TLT), so this is. Good day to buy interest-sensitive. The play this summer may not be a selloff, but a rotation out of tech into interest-sensitive.

Wells Fargo is the cheapest large bank in the market. This is because for the last decade, they have been set back by an endless series of fines for their dubious business practices. They also faced capital restrictions. Getting caught stealing from churches because they were too dumb to notice is not good for business. It is terrible for the share price.

However, new management is now in place and a turnaround is underway. The administration has lifted remaining restrictions and forgiven fines as part of their deregulation play. Little known is that Wells Fargo has the fifth-largest shareback policy in the country, with up to $40 billion in purchases. Wells also has a respectable options implied volatility of 40%.

DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.

If you don’t want to sit in front of a screen all day or live in a foreign time zone when the US stock market is closed, such as Australia, simply enter a spread of Good-Until-Cancelled orders overnight, like $4.98, $4.96, $4.94, and $4.92. You should get done on some or all of these.

For details about Wells Fargo, please click here to visit their site.

This was a bet that the (WFC) would not fall below $70.00 by the August 15 option expiration in 23 trading days.

Here are the specific trades you need to exit this position:

Sell 25 August 2025 (WFC) $65 calls at………….……………….…$20.00

Buy to cover short 25 August 2025 (WFC) $70 calls at…………$15.02

Net Proceeds:……………………………..………….……………………….$4.98

Profit: $4.98 – $4.60 = $0.38

(25 X 100 X $0.38) = $950 or 8.26% in 8 trading days.

 

 

If you are uncertain about how to execute an options spread, please watch my training video by clicking here.

The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep-in-the-money spread trades can be enormous.

Don’t execute the legs individually, or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.

Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.