Morgan Stanley (MS, news, chart) puts are active. 20,000 contracts have traded, compared to 12,000 calls. The top two trades involved blocks of 5,000 October 34 and October 22.5 put options. At 12:15 Eastern time, the 34s traded offerside or $2.32 a contract and the 22.5s bidside at 47 cents a contract. Both traded on the ISE and, with MS trading at $38.07, the trade might be part of a roll, or moving a position in 22.5s up to the 34 strike. However, the action is possibly part of a substantial bear put spread–buying the 34s and selling the 22.5s. The trade might have been motivated, in part, by the new restrictions on short selling since MS is on the list of restricted stocks. If so, the trader is proabably bearish and pays a net debit of $1.85 for a potential profit of $9.65 should shares of Morgan Stanley fall below $22.5 by October options expiration.
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.