The patented option-trade picking algorithms that power MarketIntelligenceCenter.com's Artificial Intelligence Center are highlighting two trades on Morgan Stanley (MS) today after it closed at $42.61 on Dec 6, 2018.
For more conservative investors, look at a covered call using the Jan 18, 2019 $42 call for a net debit of about $40.25. This trade will return 4.32% (37.55% annualized, for comparison purposes only) as long as the stock closes above $42 at expiration. Morgan Stanley can fall 5.51% before causing a problem.
For investors with a higher appetite for risk, consider a diagonal spread with a Jan 17, 2020 $28 call taking the place of the long stock position and the same short position in the Jan 18, 2019 $42 call. This trade only costs about $13.09 to get into and the rate of return increases to 6.87% (37.55% annualized, for comparison purposes only) but the downside protection falls to 3.54%.