2nd Update Dec 1st at 11:33am:

MS closed the second half of this dec 15/16 call spread at .26, so at an average of .305 for a total profit of .135 on the trade.

Update Dec 1st 2011 at 10:30am:

MS: since buying the Dec  15/16 Call Spread f0r .17 last Wednesday for .17, the stock has rallied almost 13%….You guys know the drill, I am now going to sell half of my position for .35 double the original purchase price and let the other half ride for now.

GS: Since buying the Dec 100/105 call spread last Wednesday for .65 the stock is up about 8% and I am going to sell this position at 1.00 for a .35 gain.

Also as a punt I paid .22 for the GS Dec2nd weekly 100 puts for .22, I am going to close these at .17 for a .05 loss.

Basically I think the rally is a bit manufactured and I want to take some profits on some short term long positions that I was in for a little bounce and look for a good opportunity to get short!

Original Post Nov 23rd, 2011:GS/MS Trade: Conspiracy Theory Trade: ECB Creates Epic Thanksgiving Short Squeeze

With MS at (13.14) I just bought the Dec(regular) 15/16 Call Spread f0r .17

Breakeven: 15.17, max gain 16 or higher make full .83

Also Bought the GS (88.50) Dec17 regular 100/105 call spread for .65 

Ok here is a little conspiracy theory that I just dreamed up…..if the Europeans are close to some form of ECB intervention to backstop Euro-zone Nation’s Sovereign debt could you think of a better time to announce it than tomorrow while U.S. markets are closed. With only a 1/2 of a trading day on Friday they could create a short squeeze of epic proportion that would likely last for a week.  If the ECB made some definitive statement that they would be the “lender of last resort” than you would see a bank rally that fits the thesis of the indivdual buying all of those upside calls in Dec banks stocks (below).

One way to play would be to buy weekly calls in some of the banks that have been hit the hardest. Here’s the trade:

TRADE: GS ($88.25) Bought Dec2 (weekly) 100 Calls for .22

Break-Even Next Friday: 100.22 or higher.

OR You Could buy Nov25th weekly calls in anything!  This is obviously risky and those are expensive 1/2 day options that if you get nothing will be worthless by about 10am Friday morning.

This is a lotto ticket type trade and not for everyone. This is not the type of trade you want to risk much capital on as the likelihood is that you will lose all that premium.

Buyer of Upside Calls in Bank Stocks, Betting on ECB Intervention?