NEW DIRECTIONAL CALL PLAYS

Morgan Stanley - MS - close 27.11 change +1.47 stop 26.50

Company Description:
Morgan Stanley is a financial holding company. Through its subsidiaries and affiliates, the Company operates as a global financial services company that provides its products and services to a diversified group of clients and customers, including corporations, governments, financial institutions and individuals. It operates through three business segments: Institutional Securities, Global Wealth Management Group and Asset Management. In May 2009, it divested all of its remaining ownership interest in MSCI Inc. During the year ended December 31, 2009, Morgan Stanley disposed its former real estate subsidiary, Crescent Real Estate Equities Limited Partnership. On May 31, 2009, the Company and Citigroup Inc. (Citi) consummated the combination of the Company's Global Wealth Management Group and the businesses of Citi's Smith Barney in the United States, Quilter in the United Kingdom and Smith Barney Australia. The combined businesses operate as Morgan Stanley Smith Barney Holdings LLC. (source: company press release or website)

Target(s): 28.50
Key Support Areas: 26.40, 25.64
Key Resistance Areas: 27.25, 28.00
Time Frame: 1 to 2 weeks

Why We Like It:
This trade is a counter trend play on the financial sector and MS which are both extremely oversold. With the financial regulation bill finally moving forward the sector has more clarity and I believe the financials are due for a bounce along with the overall market. MS created a huge green candlestick on Friday and I believe the stock is poised to move higher in the coming days. I would like to see MS retrace some of the gains from Friday prior to entering so I have listed a trigger at $26.60 to initiate long positions.

Suggested Position: June $27.00 CALL if MS trades down near $26.60, current ask $1.54, estimated ask at entry $1.30

Annotated Chart:

Entry on May xx
Earnings Date: More than 2 months (unconfirmed)
Average Daily Volume: 25 million
Listed on 5/19/10

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Chart:
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NEW DIRECTIONAL PUT PLAYS

IAC/Interactive Corp - IACI - close 21.48 change -0.00 stop 23.10

Company Description:
IAC/InterActiveCorp. (IAC) is an Internet company with more than 50 brands serving consumer audiences across more than 30 countries. The Company operates in four business segments: Search, Match, ServiceMagic and Media and Other Businesses. The Company’s Search segment consists primarily of Ask.com and other destination search Websites through, which it provides search and related advertising services. The Company is a provider of subscription-based online personals services in the United States and various jurisdictions abroad. ServiceMagic is an online marketplace that connects consumers, by way of technologies, with home and other local service professionals, all of which are pre-screened and the majority of which are customer-rated. The Company’s Media and Other segment consist primarily of Shoebuy, Pronto, Connected Ventures, Evite, Gifts.com, InstantAction.com, The Daily Beast and Electus. (source: company press release or website)

Target(s): 20.50, 20.05
Key Support Areas: 21.15, 200-day SMA
Key Resistance Areas: 22.04, 22.30, 22.80
Time Frame: Several Weeks

Why We Like It:
IACI's chart looks bad and it is barely hanging on to an upward trend line that began in March 2009. I'm expecting a bounce in the stock but I think the bounce will be short lived and I suggest readers initiate short positions when that happens. I have listed two areas for possible entries of short positions: If PCS retests its highs from Thursday near $21.90 or if the stock fills the gap down from Wednesday to Thursday (5/19 to 5/20) near $22.25. I have listed 3 targets that I expect IACI to trade down to in the coming weeks: $20.50, $20.05, and $19.50. I also like the 2:1 risk/reward ratio of this trade set-up: depending on the entry/exit prices, we are essentially risking about $1.00 to make $2.00 or more. Our stop is $23.10 which is 50-day SMA. It will take a monumental effort for IACI to get back up to this level.

Suggested Position: June $22.50 PUT, current ask $1.60, estimated ask at entry $1.25.

Annotated chart:

Entry on May xx
Earnings More than 2 months (unconfirmed)
Average Daily Volume: 1.4 million
Listed on May 22, 2010