Trade Alert - (MS) October 6, 2022 - BUY

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.

 

Trade Alert - (MS) – BUY

BUY the Morgan Stanley (MS) October 2022 $67.50-$72.50 in-the-money vertical Bull Call spread at $4.40 or best

Opening Trade

10-6-2022

expiration date: October 21, 2022

Number of Contracts = 25 contracts

The brokerage sector has been beaten like the proverbial red-headed stepchild this year, with plunging stock market prices and volumes.

The Volatility Index is back over $30 today so we have an entry point to add another short-dated position.

The best time to pick up this position will be during a market meltdown day when the (SPX) is trading under $3,500 and the Volatility Index is over $34.

(MS) is the class act in the global investment banking sector, and CEO James Gorman is the best CEO in the sector. I helped personally build out some of the key fund management and trading infrastructure some 40 years ago and the profits are now kicking in big time.

Yes, back then, I got Morgan Stanley into Japan when the Nikkei Average was only at 3,000 on its way to 39,000. The memory still titillates.

And here is the sweet spot. Fears of a recession have knocked $36, or 33% off the $108 high in (MS) shares this year. To learn more about the company, please visit their website at https://www.morganstanley.com

I am therefore buying the Morgan Stanley (MS) October 2022 $67.50-$72.50 in-the-money vertical Bull Call spread at $4.40 or best.

Don’t pay more than $4.60 or you’ll be chasing on a risk/reward basis.

Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES. Just enter a limit order and work it.

This is a bet that Morgan Stanley will not fall below $72.50  by the October 21 options expiration in 11 days.

Here are the specific trades you need to execute this position:

Buy 25 October 2022 (MS) $67.50 calls at………….………$15.00

Sell short 25 October 2022 (MS) $72.50 calls at……….…$10.60

Net Cost:………………………….………..………….….................$4.40

Potential Profit: $5.00 - $4.40 = $0.60

(25 X 100 X $0.60) = $1,500, or 13.64% in 11 days.

 

 

 

 

If you are uncertain about how to execute an options spread, please watch my training video by clicking here.

The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.

Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.

Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.