The out-of-contract Scottish international striker is in line to join the Molineux men after impressing on trial at the club this week.
McCarthy has made it clear he wants to sign the experienced frontman who is looking to rebuild his career after suffering a cruciate ligament injury 13 months ago.
McFadden parted company with Birmingham City during the summer after the Carling Cup holders did not take up an option on his contract.
TALENTED LAD
But he has shone during training with Wolves this week and McCarthy hopes a deal can be thrashed out for the 28-year-old.
McCarthy said: "I sincerely hope there are going to be some developments with McFadden. He has looked fine this week with us, I want to sign him.
"When will that happen and how far down the road we are, I don't know.
"But he is a talented lad and a good character and has fitted in really well.
"He has enjoyed it, at least I think he has, and he will be a great addition to our squad, definitely.
"I get the feeling from him that he wants to come here and I hope that is the case. If we can do something, then we will."