Morgan Stanley Stock Boasting Multiple Support Layers



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<div>Bank stock <strong>Morgan Stanley (NYSE:MS) </strong>is forming a cup-and-handle pattern that is currently flagging. The shares are back above their 200-day moving average, with a confluence of rising moving averages below the support price.</div>
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<div>There&rsquo;s additional support at MS&rsquo; year-to-date anchored VWAP (volume-weighted average price) — the first time there hasn&rsquo;t been a failure at this level all year. December and January are the second and third most bullish months of the year, from a seasonality perspective, making now the time to strike with MS.</div>
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<div>A further breakout could force money managers to buy shares of MS, and the 95- and 105-strikes could act as magnets.</div>
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Digging deeper, the stock’s 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 1.13, and is rolling from near all-time high exposure levels. In other words, this suggests a healthier-than-normal appetite for long puts of late.</div>
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<div>Now looks like an ideal time to speculate on the stock’s next moves with options, given its Schaeffer’s Volatility Index (SVI) of 26% stands in the low 10th percentile of readings from the past year. This means options traOders are pricing in low volatility expectations for MS right now.</div>
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<div>Our recommended February call has a leverage ratio of 8.2, and will double in value on a 12.3% pop in the underlying shares.
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<div style="text-align: left;"><em>Subscribers to Schaeffer’s Weekend Trader options recommendation service received this MS commentary on Sunday night, along with a detailed options trade recommendation — including complete entry and exit parameters. Learn more about why&nbsp;<a href="https://store.schaeffersresearch.com/products-services/weekly-monthly-newsletters/weekend-trader-alert?code=DCGWKEND" target="_blank"><strong>Weekend Trader</strong></a>&nbsp;is one of our most popular options trading services.</em></div>
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