On Friday’s Options Action, the crew analyzed the performance of the banking sector and recent earnings. Banks have underperformed the market over the past decade and has recently turned lower this earnings season. Despite having decent fundamentals, bank stocks have traded lower after beating earnings, suggesting a bearish outlook on the sector. Morgan Stanley options currently are cheap and provide an opportunity to bet on a move lower. Expecting MS to trade lower after their earnings announcement, Michael Khouw suggests buying a June 52.5/47 Call Vertical for a $1.40 Debit.
We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience. You can also view the Options Action’s video by clicking on the following link: MS Options Action