Wells Fargo Set to Surge?

Dec 27, 2020

The Fed reserve said late Friday it will let allow banks to start buying back stock again, restrictions that were put in place amid Covid 19 back in June of 2020.

With that little bit of fundamental news and the technical charts where Wells Fargo is, we can look for some long entries on this stock.

Our Monthly chart shows a 10-year Support levels near $24 per share with the stock making some bullish progress pre-Christmas.

Looking at support resistance form a linear fashion; we can see price sold a little out of the bearish trend and made a move back into this 10-year regression channel.

Our 4 Hour trend Finder Chart has discovered some bullish movement already and prices closed Thursday Christmas Eve at $29 dollar range.

We see price moving respectfully off of the 20-EMA here. How would we play this? I am not a typical stock holder myself. I like derivatives. I trade Futures and Options. In this case I looked at the options table and checked for the Implied Volatility to make sure that I am not buying expensive premium. Remember, most inexperienced options buyers fail even when the direction is right because they don’t simply know how to check for the premium being fair price or high price.

Now where are my targets? A short-term target is nearby at $33, followed by a long-term target back up around the $50 area. I would prefer to buy a LEAP Option here on the options table and hold this trade in my portfolio.

A January 21, 2022 Call Option $30 Strike near the midpoint bid/ask price of about $4.50 per contract= ($450 per contract). This is a long delta trade, meaning all my premium is the most I can ever lose. I got time (theta) on my side and premium is moderate. Its not the cheapest in the world but it will do simply fine.

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