Trade of the Day: PNC Financial April $60/$57.50 bull reversals 2,000x

The Trade

A trader sold 2,000 April $57.50 puts at $0.65 and bought 2,000 April $60 calls at $1.93 for a debit of $1.28 or $256,000.

Risk/Reward

As you can see from the graph above, the bull reversal has unlimited risk to zero and unlimited profit potential. The max risk is being put the stock if the underlying is trading below $52.50 before April expiration. The trader sold the puts to partially finance the purchase of the calls. The break even price level at April expiration is $61.28. PNC closed today at $61.27.

The line shown is the break even price level. The 52-week range is a low of $49.43 and a high of $70.45. PNC traded 8,630 contracts today compared to average daily volume of 7,209. PNC will report earnings on April 21st and its dividend is expected on April 12th.

The PNC Financial Services Group, Inc. is a diversified financial service company. The Company is engaged in retail banking, corporate and institutional banking, asset management, residential mortgage banking and global investment servicing, providing many of its products and services nationally and others in its primary geographic markets.

No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.

WFC trades 2X its daily average

Wells Fargo (WFC) traded 129,121 options today, 94,688 calls and 34,473 puts vs a daily average of 65,483 options, 37,088 calls and 28,395 puts.  Traders added 844k deltas in the calls and -168k deltas in the puts.

The print that caught my eye was a buyer of 10,000+ in the money March 32 calls this morning.  After these prints hit the tape the stock never looked back.  

There was also a diagonal short calendar spread where a trader sold 2500 of the March 35 calls @ $0.64 and bought 2500 of the Feb 34 calls @ $0.60.  This trade is profitable above $34.17 tomorrow and above $34.73 on expiration day.   This is a professional trade to be long deltas, long gamma, and short vol, for a credit of $0.04.  Here is the risk/reward for tomorrow:

As you can see in the chart below WFC is testing its highs from April of 2010.  This is very interesting when you compare it to the other big banks.  JPM, GS, C, MS, AIG, BAC, USB, PNC and of course XLF are all below their 2010 highs.