Trader makes bullish pre-election trade on a banking giant

On the heels of the presidential election results, one trader is banking on Morgan Stanley heading higher.

Todd Gordon of is trading Morgan Stanley ahead of what he believes will be "an increase in volatility realized in the markets, which will basically break ranges" in the currency, bond and stock markets, and will ultimately help the investment bank.

"Fundamentals and inter-market analysis of the banks look solid," Gordon said Tuesday on CNBC's "Trading Nation."

Gordon, examining a chart of Morgan Stanley going back to last January, sees a level of resistance at the $36 mark.

The stock rallied off its year-to-date lows in February, and now appears to be testing $36 once again, Gordon said, and he sees the stock going higher.

To capitalize on this, Gordon is buying the November 34-strike call and selling the 36-strike call for a total cost of $0.57 cents per share. If Morgan Stanley manages to close above $36 on Nov. 18, this trade will be worth $2 per share, for a 250 percent profit.

"That's your trade in Morgan Stanley ahead of the explosive, volatility-inducing election," Gordon said. "So it should be interesting."

Trader takeaway: Todd Gordon is betting that Morgan Stanley will rise after the election and he is buying a 34/36 November call spread in order to capitalize off such a move.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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