Trade Update: MS-Selling Half Dec Put Spread for More Than A Double

by Dan December 12, 2011 9:49 am • Commentary

Trade Update Dec 12th, 2011 @ 9.54am: With MS down about 10% since putting on this Dec Put Spread I can now sell this spread for .45, more than double what I paid.  You guys know the drill I will sell half and let the other half ride into this Friday’s expiration.  With the way the markets are moving and this name in particular I think it makes sense to take some profits when you have them.   In this is instance, no matter what happens from now till Friday’s close I can’t lose on this trade.


Original Post Dec 8th, 2011: MS-Looking to Take Advantage of a Tempered Opening in U.S. Banks

As I stated in the “Morning Word”, DB is down about 2.00 in the pre-market on investors disappointment with ECB chief Draghi’s failure to instill confidence that the central bank will continue to buy European Sovereign debt.  MS has rallied over 30% in the last 2 weeks, I want to fade this move into next week’s expiration. 


BOUGHT:  MS ($17.33) Dec17th 16/15 Put Spread for up to .20

-Bought 1 Dec17th 16 Put for .38

-Sold 1 Dec17th 15 Put at .18

 Break-Even On Dec Expiration:

Profits btwn 15.80 and 15 make up to .80, max gain of .80 at 15.00 or lower

Loses btwn 15.80 and 16 lose up to .20 and max loss of .20 above 16