Some interesting options trades crossed the tape today.  Many of them involved big name financials:

JPM – JPMorgan Chase & Co. – A three-legged combination play suggests one investor anticipates a significant rally in JPMorgan’s shares within the next few months. The stock is trading 2% higher this afternoon to $43.65. The trader utilized both calls and puts in the March contract in order to position for potential bullish movement in shares of the underlying. The investor sold 15,000 puts at the March 40 strike for an average premium of 1.18 apiece to partially offset the cost of buying a call spread. The call spread involved the purchase of 15,000 calls at the now in-the-money March 43 strike for an average premium of 2.58 each, marked against the sale of 15,000 calls at the higher March 47 strike for 90 cents premium apiece. The net cost of the three-legged strategy amounts to 90 cents per contract. Maximum potential profits of 3.50 per contract – a grand total of $5.25 million – are available to the investor if JPM’s shares rally through $47.00 by expiration day. Profits amass above the breakeven price of $43.50. The short put stance at the March 40 strike implies the investor is willing to have shares put to him at $40.00 apiece if the put options land in-the-money.

WFC – Wells Fargo & Co. – A long-term short straddle play on Wells Fargo suggests one investor expects shares to rally 7.5% to $30.00 in the next twelve months to expiration in January 2011. WFC’s shares are up more than 2% today to stand at $27.90. It appears the optimistic trader sold 7,700 puts at the January 2011 30 strike for a premium of 5.65 each, and sold 7,700 calls at the same strike for about 3.30 apiece. The straddle-strategist rakes in a gross premium of 8.95 per contract on the trade. The investor keeps the full amount of premium pocketed today if WFC’s shares rally 7.5% from the current price within the next year to settle at $30.00 by expiration.

FIG – Fortress Investment Group LLC – Asset management firm, Fortress Investment Group, realized a nearly 8% increase in the price of its shares today to $5.07. The rally in shares spurred a bullish feeding frenzy in January 2011 contract call options. Investors purchased approximately 6,000 calls at the now in-the-money January 2011 5.0 strike for an average premium of 1.19 per contract. Call-buying option traders break even on the transaction if FIG’s shares surge 22% to $6.19 in the next twelve months to expiration.

Source: IB