Wells Fargo, one of the largest banks in the United States, has been under a ton of fire over the last few weeks after news emerged that over 2 million accounts and credit cards were opened without the permission of those whose names were attached to them. Over the last five trading days, the company’s stock has fallen by more than $2, and it is almost $12 off of its high point for the last 52 weeks. They are certainly not the only financial stock to be suffering over the last year, but they are just the latest to receive the limelight of bad publicity.
Despite all of the bad news that Wells Fargo has seen recently, they are still overall more stable than the market as a whole. Their beta sits at 0.90, meaning that they are about ten percent more stable than the major indices that support it. In fact, despite all of the bad press, they are still rated an “outperform” by some financial analysts as the most recent downturn in the company has pushed it down below what its true value is, and the most natural place for it to go long term is back up in price. This doesn’t happen often within the stock market, but it is a great tool for investors to take advantage of. Buying low and selling high is a highly used phrase within the world of finance, but it’s used for a really good reason: it works. Obviously it isn’t an easy thing to figure out, but when it works, it works well.
The same concept can transfer pretty easily to binary options, but only with a certain mindset. If you attempt to focus on short term call options, you will undoubtedly be right more often than you will be wrong just based on the law of averages, but there’s no way that you will overcome the inherent variance just with this random chance approach. You should still focus on the technical analytics behind the company if you are going to trade this stock short term. This will give you a far better chance of success.
And don’t forget that when the general trend of a company—or any other asset for that matter—is upward, then a system of call options is almost always the smartest approach. Because the company will most likely be moving upward in price over the long term (whatever this means), then call options will be given the most prominence in reality, and that means that they will be the most useful of any type of binary option to you on a regular basis. Timing your trades will only enhance your accuracy rate, and improve your profit rate. And to do that, you will need to have a strong understanding of technical analysis.
Did Wells Fargo do something unethical and even morally reprehensible? Absolutely. You can assure that there will be changes in management as a result of this, even more so than what we have already seen. However, Wells Fargo is a company, and not a person. As a corporation, they have legal obligations like an individual would have, but that doesn’t mean that they are not capable of making changes and improving their processes. In fact, once they do, they will start seeing better profits and their stock price will go up. It could take a few months or even a couple years, but Wells Fargo is likely to rebound from this hit and start seeing their stock go up in value. This doesn’t impact immediate binary trades, but it will eventually, so keep your eyes on this stock and wait for a good entry point.