DailyPlay – Opening Trade (MS) – July 15, 2025

MS Bullish Opening Trade Signal

Investment Rationale

Investment Thesis:
Morgan Stanley (MS) offers an attractive bullish setup heading into its Q2 earnings report on Wednesday, July 16th, before the market open. With equity markets hovering near all-time highs and a resurgence in capital markets activity, MS is well-positioned to capitalize on strength across both its institutional advisory and wealth management franchises. The stock trades at a relative valuation discount while delivering consistent margin strength, creating a favorable backdrop for multiple expansion. Near-term catalysts include rising asset prices, recovering deal volumes, and the potential for a beat-and-raise earnings print.

Technical Analysis:
Morgan Stanley continues to trade in a well-defined uptrend, holding above all key moving averages with the 20-day MA providing consistent support. The stock cleared major resistance at $140 earlier this month and has since been consolidating just below its record high of $145.16, set on July 7th. Momentum remains strong, with an RSI near 70 and improving relative strength, suggesting bullish conditions without signaling exhaustion. A strong earnings report could serve as a breakout trigger, propelling the stock into new highs with an intermediate target near $160. Initial support sits at $138, aligning with both the 20-day MA and recent breakout level.

Fundamental Analysis:
Morgan Stanley trades at a discount to peers while maintaining robust profitability, particularly in net margins where it outperforms the industry. Although its growth metrics are slightly below average, the firm’s balanced revenue streams and consistent operating leverage support durable earnings power.

• Price to Book (PB) Ratio: 2.38x vs. Industry Average 4.29x
  
• Expected EPS Growth: 9.05% vs. Industry Average 11.9%
  
• Expected Revenue Growth: 6.84% vs. Industry Average 7.01%
  
• Net Margins: 27.38% vs. Industry Average 21.10%
  

MS’s ability to sustain above-average margins highlights management’s discipline and efficiency, key differentiators amid evolving macro conditions.

Options Trade:
Buy the MS Aug 29, 2025 $140/$160 Call Vertical for $6.88. This defined-risk spread targets a continued move higher post-earnings, offering a maximum profit of $1,312 if the stock closes above $160 at expiration. With MS currently trading near $144, the $140 strike is already in the money, providing positive delta and directional exposure while capping the premium cost. The structure delivers a favorable 1.9:1 reward-to-risk ratio, making it a capital-efficient way to express bullish conviction into and beyond the earnings event.

MS – Daily

Trade Details

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish Debit Spread

Details: Buy to Open 2 MS Aug 29 $140/$160 Call Vertical Spreads @ $6.88 Debit per Contract.

Total Risk: This trade has a max risk of $1,376 (2 Contracts x $688) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $688 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is expected to continue higher over the duration of this trade.

1M/6M Trends: Bullish/Bullish

Relative Strength: 9/10

OptionsPlay Score: 106

Stop Loss: @ $3.44 (50% loss of premium)

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Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

PLEASE NOTE that these prices are based on Monday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

View MS Trade