Patient bulls score in $MS

Patient option traders scored big gains on longer-dated upside positions in Morgan Stanley (MS) today.

Last year on Apr. 2, Market Rebellion’s Unusual Activity Service flagged the purchase of 5,950 January $65 calls for $3.56 to $3.57 as part of a bullish roll with shares at $43.41. This was clearly fresh buying, as open interest in the strike was only 1,356 contracts before the activity appeared.

Those calls traded for as much as $11.30 today, more than 3 times their purchase prices. The stock rose 75.65% in the same time frame, illustrating the kind of leverage that can be achieved with options.
56.87

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 up 1.08% to $76.06 at the close today.