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 TradingAnalysis.com 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.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

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