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Trader makes bullish pre-election trade on a banking giant

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Trader bets on Morgan Stanley headed higher

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.