Morgan Stanley (MS) is our first company this quarter to report earnings tomorrow morning before the opening bell. We are holding a stock position, but without an option as we let the March 57.5 call that we sold for $0.85 expire worthless.
I chose to not sell a new covered call as it was my belief that MS was due for a bounce, and we have seen the stock rebound from a low of 28 to 38 today.
However, with earnings coming tomorrow morning I am going to sell a new call to further lower our cost basis and risk headed into earnings.
To execute this trade, you need to:
Sell to Open the MS May 44 Calls (exp. 5/15/2020) for $0.50 or more.
As is always the case, for every 100 shares you are long, you can sell one call. For every 200 shares you are long, you can sell 2 calls.
This call sale will be a mistake if MS blows through 44 on May expiration as we will be taken out of our stock position at 44.
If you have any questions about these instructions, please don’t hesitate to email me.