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April 18, 2013  Thu 3:47 AM CT

MS: SEE CHART GET CHAIN FIND STRATEGIES
A large put trade topped yesterday's option activity in Morgan Stanley before its first-quarter report this morning.

optionMONSTER systems show that a trader bought 22,805 October 20 puts for $1.45 and sold the same number of October 15 puts for $0.29. The volume was multiples of the previous open interest in each strike, clearly showing that this is new activity.

This bearish vertical spread cost $1.16 to open, which is the trade's maximum potential loss. The maximum gain of $3.84 would be realized if MS is below $15 at the October expiration. (See our Education section)

MS was down 1.74 percent to close at $21.47 yesterday. It was as low as $20.86 in the morning at a support level going back to mid-January, when shares gapped higher. The stock climbed to a high above $24 in mid-February.

More than 145,000 MS options traded yesterday, compared to a daily average of 31,000.
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Options Academy: Ron's Risk Calculation--A Real Life Example

It is rare that I get a chance to give a real-life, real-time example in my articles that the readers were not only following but were actually involved in at the time the event is happening. Well, that is where we are right now in our QQQ trade from last week. Let's recap the trade itself.

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