Shares of Morgan Stanley (MS) are trading higher after both Lehman (LEH) and Goldman Sachs (GS) posted better than expected earnings. Implied vols are coming down across the sector, with LEH, Annaly (NLY), Fannie (FNM), Washington (WM), and Freddie (FRE) seeing substantial volatility crushes Tuesday morning. MS has also seen a dramatic decrease in IV, even as an earnings report looms (tomorrow before the bell). Analyst estimates range from 64 cents to $1.45, with consensus of slightly more than a buck ($1.03). However, although the bar has been set pretty low and shares are up $6.00 to $42.38, trading remains defensive and sentiment is mixed. 46,000 MS puts and 28,000 calls have traded so far today.
About the Author (Author Profile)
Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.