Morgan Stanley Stock Dips Ahead of Earnings Report
Financial services giant $Morgan Stanley(MS)$ has seen its stock price decline over 5% in the lead-up to its first-quarter 2024 earnings report, scheduled for release on Tuesday, April 16th.
MS Daily Chart
Morgan Stanley's wealth management arm is currently under investigation by multiple regulators, including the U.S. Securities and Exchange Commission (SEC) and the Office of the Comptroller of the Currency (OCC). Regulators are scrutinizing the bank's procedures for vetting new clients, including verifying their identities and the sources of their wealth, as well as how it monitors their financial activity. Some of these probes reportedly focus on international clients.
Investors are reacting to the regulatory scrutiny by offloading their Morgan Stanley shares, driving the price down over 5%. This has also led to a spike in implied volatility (IV) for Morgan Stanley options contracts. Options sellers might see this as a potential opportunity.
Implied Volatility Curve Chart
Personally, I am looking for 10-15 delta options with 30-45 days to expiry to execute this trade. These options offer a balance between potential profit and risk, and the elevated IV presents a chance to collect higher premiums compared to periods of lower volatility.
Only time will tell how Morgan Stanley navigates these challenges. The upcoming earnings report and the trajectory of the regulatory investigations will be key factors to watch. The upcoming earnings report will be a critical data point for investors, and any significant deviation from analyst forecasts, particularly on the downside, could trigger further selling pressure. The regulatory investigations are also a wild card. Depending on the severity and duration of the probes, they could continue to weigh on investor sentiment and constrain the bank's ability to grow its wealth management business.
Do you think the share price will bounce back from this recent decline, or will the regulatory pressure continue to weigh on Morgan Stanley?
Will the underlying business fundamentals be enough to outweigh the current headwinds, or will the market continue to price in a period of uncertainty?
Share your insights below!
Disclaimer: The information provided is for educational and informational purposes only and does not constitute financial advice. Always conduct your research before making investment decisions.
Follow @TigerStars @Daily_Discussion @Tiger_SG @TigerEvents @TigerPM
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Buy the dip before earnings?