• Chart of the Day: Morgan Stanley (MS)

    by  • February 21, 2013 2:17 pm • Quick Hits, Tony Venosa's Chart of the Day • 0 Comments

    Today’s chart is of Morgan Stanley (MS) which is a financial holding company, providing various financial products and services to corporations, governments, financial institutions, and individuals worldwide.

    Ticker:  Morgan Stanley (MS)

    Strategy:  Straddle trade

    What I Am Looking At:

    • iShares Dow Jones US Broker-Dealers (IAI) showing tremendous relative strength, up more than 16 percent year-to-date
    • MS also strong, up nearly 20 percent year-to-date
    • The 20 percent YTD level coincides with double the 2011 low and double the 52-week low which could be an important inflection point
    • Shares are trading between two significant round numbers namely the $20 and $30, which could act as potential magnets for price
    • Potential catalysts on the horizon:  Company-run stress tests will be made available to the public starting this March, two conferences next week on February 26th and February 28th
    • 30-day ATM implied volatility is low
    • Large call open interest for the March series resides at the 24- and 25-strikes could create a magnet effect on future good news
    • Last significant March put open interest strike resides at the 20-strike which coincides with this significant round number level, possible re-visit
    • Analyst community is divided as 11 maintain “strong buy” ratings, 10 maintain “hold” ratings, and 2 have “strong sell” ratings
    • Our proprietary volatility scorecard has a 98 reading, indicating a strong potential for shares to make big moves compared to what the options are currently pricing
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    Tony Venosa, CMT is a Senior Options Strategist and works on the trading desk at Schaeffer’s Investment Research. He joined Schaeffer’s in 2010. He has worked in the finance industry for over 15 years. He began his career as a trading assistant in Chicago on the floor of the Chicago Mercantile Exchange. He later moved upstairs and worked as a commodities broker on both the retail and hedging side. He left the brokerage industry to begin his trading career as a proprietary equities trader at a Chicago firm. In 2000, Tony moved backed to his hometown and continued trading his personal account. He later went on to earn his Chartered Market Technician designation. He earned a B.S. in Finance from Miami University. Tony’s main focus is short-term directional option trading.


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