Morgan Stanley (MS) – Short Term Bearish Positioning into Earnings

by Dan October 14, 2011 10:04 am • Commentary

Morgan Stanley reports pre-open on 10/19. Implied move in stock is 6.5%. Last 4 qtr avg move in the stock has been 4.5%.
The stock is up 32% since oct 4 lows but still down 43% on the year. I want to establish a posiition going into this event. The Trade is… a pure sentiment trade but with stock 15.40 i just bought oct 14 puts for .28

I will look to leg into a put spread as stock heads lower into next weeks print. The stock is very oversold and a lot of bad news is in the stock at current levels which is exact reason I dont want to be naked short any bank stocks and frankly I may buy some to go long on the next puke.

But the Oct 14 puts, while expensive on vol terms, look dollar cheap to me.