Option bulls score in $MS

Bullish option traders scored big gains on upside call positions in Morgan Stanley (MS) today.

On Dec. 31, Market Rebellion’s Unusual Activity Service flagged the purchase of 2,800 Weekly $65 calls expiring on Jan. 22 for $4.18 to $4.45 with shares at $68.23. This was clearly fresh buying, as open interest in the strike was only 174 contracts before the activity appeared.

Those calls traded for as much as $11.75 today, more than 2.5 times their purchase prices. The stock rose 12.52% in the same time frame, illustrating the kind of leverage that can be achieved with options.

It is the second winning trade to be posted on Market Rebellion in the name this month.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

MS was down 0.2% to $74.84 at the close today, after making a new 52-Week high of $77.76 earlier, after topping earnings estimates before the opening bell.