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) April 2023 $65-$70 in-the-money vertical Bull Call spread at $4.40 or best
Opening Trade
3-15-2023
expiration date: April 21, 2023
Number of Contracts = 25 contracts
The flight of money right now is from small, undercapitalized, and questionable to large, overcapitalized, and rock solid.
The brokerage sector has been beaten like the proverbial red-headed stepchild this week, with plunging stock market prices and volumes. Concerns over Credit Suisse Bank in Switzerland, with which (MS) has no affiliation whatsoever, are pouring gasoline on the fire.
The Volatility Index ($VIX) is back over $28 today so we have an entry point to add another short-dated position. The Mad Hedge Market Timing Index down to only 17 is another big incentive.
The best time to pick up this position will be during a market meltdown day like this. (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 still 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 the 39,000. The memory still titillates.
And here is the sweet spot. Fears of a recession have knocked $20, or an eye-popping 19% off the $104 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) April $65-$70 in-the-money vertical Bull Call debit 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 $70.00 by the April 21, 2023 option expiration in 22 days.
Here are the specific trades you need to execute this position:
Buy 25 April 2023 (MS) $65.00 calls at………….………$21.00
Sell short 25 April 2023 (MS) $70.00 calls at…….……$16.60
Net Cost:………………………….………..………….….............$4.40
Potential Profit: $5.00 - $4.40 = $0.60
(25 X 100 X $0.60) = $1,500, or 13.64% in 22 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.
