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Options Action: Morgan Stanley

Considering shares have slipped about 20% over the past 3 months, should you place bets that Morgan Stanley stock is oversold?

According to Mike Khouw of Cantor Fitzgerald it could take some time for the stock to turn around, let alone generate upward momentum.

Nonetheless, with stable returns in its wealth management business and attractive valuations, there are good reasons to be constructive.

But, rather than place your bets outright, Khouw thinks the time may be right for the following options trade.

Get all the details. Watch the video now!




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Trader disclosure: On May 16, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Stephen Weiss is short (X). Stephen Weiss owns (DVN), (COP), (QCOM), (BRCM), (TEVA), (KO), (RIG), (HK), (AKAM), (UUP), (DE), (UAL), (MRK), (HBAN), (KEY) and (JPM); Terranova owns (VRTS); Terranova owns (AAPL); Terranova owns (JPM); Terranova owns (V); Terranova owns (BX); Terranova owns (UPL); Terranova owns (BAX); Terranova owns (PFE); Terranova owns (PEP); Terranova owns (MCD); Terranova owns (TM); Terranova owns (DIS); Terranova owns (BJ); Terranova owns (APA); Terranova owns (OXY); Terranova owns (XOM); Adami owns (AGU); Adami owns (C); Adami owns (GS); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU); Karabell owns (RIMM); Karabell owns (SLV); Karabell owns (AAPL); Karabell owns (GE); Karabell owns (GOOG)

For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
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For Zachary Karabell
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For Amelia Bourdeau
**No Disclosures


CNBC.com with wires.