Struggling Finance Stock for Bear Traders to Watch

Finance powerhouse Morgan Stanley (NYSE:MS) has failed for three consecutive days at the site of its January high. The stock is nearing the end of a call stack, which gives potential for some reversion as the 185-, 190-, and 200-strikes stall price action. Max pain rolls lower currently through May and June, giving more potential to reversion as well.

 

 
The equity sports a 10-day call/put volume ratio of 1.58 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 72% of annual readings. In other words, an unwind in this bullish attention could trigger headwinds.
 
Options look affordable, per its Schaeffer's Volatility Index (SVI) of 29% that sits in the low 31st percentile of annual readings. An implied volatility (IV) crush post-earnings is giving us a more attractive entry opportunity.
 
Our recommended June put has a leverage ratio of 10.4 and will double on a 9.2% drop in the underlying shares.