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) November 2021 $85-$90 in-the-money vertical Bull Call spread at $4.20 or best
Opening Trade
10-1-2021
expiration date: November 19, 2021
Portfolio weighting: 10%
Number of Contracts = 24 contracts
If you don’t do options, buy the stock. My target for (MS) this year is $125, up 28%.
It is clear to all that the next big sector to lead the markets will be financials. Whether the Fed tappers this week, next month, or next year, the writing is on the wall. And stocks will start discounting this eventuality TODAY.
Banks love rising interest rates and a 1.48% ten-year US Treasury bond yield, a 5.3% inflation rate, and a 6.5% US GDP growth rate makes absolutely no sense at all, even to Jay Powell. I am willing to bet on that.
China’s Largest Real Estate Developer Goes Bust, the China Evergrande Group, with $300 billion in debt just gave us a great entry point. The move smashed risk markets globally, opening the Dow Average down 985. Bitcoin plunged 10%.
Is this China’s Lehman moment, or just another day at the office? It does take them another step back towards real communism.
The Volatility Index at $25.00 also gives us another “BUY” signal. My Mad Hedge Market Timing Index is at a rare 23.
This is a short-term panic only.
This has pushed the Volatility Index (VIX) up to a sky-high $25, which has the effect of vastly overvaluing stock options. This is a gift for traders like us.
In addition, my own Mad Hedge Market Timing Index is strongly into “BUY” territory at 23. This is the lowest level since before the presidential election.
This position also has enormous support from the 200-day moving average at $85.61
I am therefore buying the Morgan Stanley (MS) November 2021 $85-$90 in-the-money vertical Bull Call spread at $4.20 or best
Don’t pay more than $4.50 or you’ll be chasing.
Morgan Stanley announced blockbuster earnings in July and the shares have since sold off big. It was a classic “Buy the rumor, sell the news” type move.
That has given us a gift. (MS) is the class act in the brokerage and fund management sector, which I helped personally build out some 40 years ago.
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.
I believe that massive government borrowing and spending will drive US interest rates up through the roof and the value of the US dollar (UUP) down. Brokers love the massive stock market volume this generates because they vastly improve profit margins.
Covid-19 is rapidly collapsing from its fourth peak. Total US deaths yesterday exceeded the 1919 Spanish Flu 675,000 peak by the time it is all over. We passed all WWII deaths last year.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and increase your bid by 10 cents with a second order.
This is a bet that Morgan Stanley (MS) will not fall below $90 by the November 19 option expiration day in 35 trading days.
Here are the specific trades you need to execute this position:
Buy 24 November 2021 (MS) $85 calls at………….………$14.50
Sell short 24 November 2021 (MS) $90 calls at………....$10.30
Net Cost:……………………..…….…….........…..………….….....$4.20
Potential Profit: $5.00 - $4.20 = $0.80
(24 X 100 X $0.80) = $1,920 or 19.05% in 35 trading days.
If you are uncertain on 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.
