Bulls take $WFC to the bank

Option traders have more than tripled their money on upside positions in Wells Fargo (WFC).

On Aug. 29, Market Rebellion’s market scanners found that 3,000 Weekly $48 calls expiring on Sept. 13 were bought for $0.18 to $0.20 above open interest of 164 contracts with shares at $46.29. Market Rebellion co-founder Pete Najarian chose WFC as his final trade last Friday on CNBC’s “Fast Money” program.

Those calls are marked at $0.62 this morning, more than 3 times their purchase prices. The stock rose 4.36% in the same time frame, showing how quickly options can far outperform their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

WFC closed yesterday at $48.31. The stock has risen since the calls were purchased as investors have returned to banks.