Morgan Stanley's Q3 2025 earnings report was last week so there will be no new earnings report prior to the options expiration date. The average target price of analysts following Morgan Stanley is $216 (+19.1% above the stock purchase price). An in-the-money Covered Calls position was established when the probability of the stock closing in-the-money (and therefore being assigned) on the 11/6/2026 options expiration date was 69.0%.
As detailed below, two potential return-on-investment results are:
Morgan Stanley (MS) -- New Covered Call Position
The buy/write transaction was:
10/19/2026 Bought 100 Morgan Stanley shares @ $181.43
10/19/2026 Sold 1 Morgan Stanley 11/6/2026 $175.00 Call option @ $8.63
Note: the Implied Volatility of the Call option was 30.2 when this buy/write transaction was executed.
10/30/2026 Upcoming quarterly ex-dividend of $1.15 per share
Two possible overall performance results (including commissions) for this Morgan Stanley Covered Call position are as follows:
Covered Call Cost Basis: $17,280.67
= ($181.43 - $8.63) * 100 shares + $.67 commission
Net Profit Components:
(a) Option Income: +$862.33
= ($8.63 * 100 shares) - $.67 commission
(b) Dividend Income (If option exercised early on October 29th, the last business day prior to the October 30th, 2026 ex-div date): +$0.00; or
(b) Dividend Income (If Morgan Stanley stock assigned at the November 6th, 2026 expiration): +$115.00
Most companies in the Financial Sector provide only modest growth prospects, but they often provide good annual dividend yields (such as the 2.5% annual dividend yield for this Morgan Stanley position). Consequently, the Covered Calls Advisor targets opportunities to use the Dividend Capture Strategy in all Financial Sector Covered Calls positions. This new November 6th, 2026 Morgan Stanley Covered Call position continues the Dividend Capture Strategy of often selling in-the-money monthly Covered Calls for one of six megacap U.S. banks (Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, and Wells Fargo) for each options expiration month:
(JPMorgan Chase quarterly for Jan, Apr, July, and Oct options expirations;
Citigroup, Morgan Stanley, and/or Wells Fargo for Feb, May, Aug, and Nov options expirations; and Bank of America and/or Goldman Sachs for Mar, Jun, Sep, and Dec options expirations).
As detailed below, two potential return-on-investment results are:
- +1.3% absolute return (equivalent to +42.1% annualized return-on-investment for the next 11 days) if the stock is assigned early (on the last business day prior to the October 30th, 2026 ex-dividend date); OR
- +1.9% absolute return (equivalent to +39.2% annualized return-on-investment over the next 18 days) if the stock is assigned on the November 6th, 2026 options expiration date.
Morgan Stanley (MS) -- New Covered Call Position
The buy/write transaction was:
10/19/2026 Bought 100 Morgan Stanley shares @ $181.4310/19/2026 Sold 1 Morgan Stanley 11/6/2026 $175.00 Call option @ $8.63
Note: the Implied Volatility of the Call option was 30.2 when this buy/write transaction was executed.
10/30/2026 Upcoming quarterly ex-dividend of $1.15 per share
Two possible overall performance results (including commissions) for this Morgan Stanley Covered Call position are as follows:
Covered Call Cost Basis: $17,280.67
= ($181.43 - $8.63) * 100 shares + $.67 commission
Net Profit Components:
(a) Option Income: +$862.33
= ($8.63 * 100 shares) - $.67 commission
(b) Dividend Income (If option exercised early on October 29th, the last business day prior to the October 30th, 2026 ex-div date): +$0.00; or
(b) Dividend Income (If Morgan Stanley stock assigned at the November 6th, 2026 expiration): +$115.00
= ($1.15 dividend per share x 100 shares)
Either outcome would provide an attractive return-on-investment result for this Morgan Stanley investment. These returns will be achieved as long as the stock is above the $175.00 strike price at assignment. If the stock declines below the strike price, the breakeven price of $171.65 ($181.43 - $8.63 - $1.15) provides 5.4% downside protection below the stock purchase price.
At least eight of the nine metrics used in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet must be 'YES' prior to establishing a position. As shown below with this Morgan Stanley position, all nine criteria were met.
(c) Capital Appreciation (If Morgan Stanley Call option is assigned early on Oct. 30th): -$643.00
+($175.00 strike price - $181.43 stock purchase price) * 100 shares; or
(c) Capital Appreciation (If shares assigned at $175.00 strike price at the 11/6/2026 options expiration): -$643.00
+($175.00 - $181.43) * 100 shares
+($175.00 strike price - $181.43 stock purchase price) * 100 shares; or
(c) Capital Appreciation (If shares assigned at $175.00 strike price at the 11/6/2026 options expiration): -$643.00
+($175.00 - $181.43) * 100 shares
1. Total Net Profit [If option exercised early on the last business day prior to the October 30th ex-dividend date)]: +$219.33
= (+$862.33 option income + $0.00 dividend income - $643.00 capital appreciation); or
2. Total Net Profit (If Morgan Stanley shares assigned at $175.00 strike price at the November 6th, 2026 expiration): +$334.33
= (+$862.33 + $115.00 - $643.00)
1. Potential Absolute Return-on-Investment (If option exercised early on Oct. 30th): +1.3%
= +$219.33/$17,280.67
Potential Annualized Return-on-Investment: +42.1%
= (+$219.33/$17,280.67) * (365/11 days); or
2. Potential Absolute Return-on-Investment (If Morgan Stanley shares assigned at $175.00 at the Nov. 6th, 2026 options expiration date): +1.9%
= +$334.33/$17,280.67
Potential Annualized Return-on-Investment (If Morgan Stanley shares assigned at the November 6th options expiration date): +39.2%
= (+$334.33/$17,280.67) * (365/18 days)
Either outcome would provide an attractive return-on-investment result for this Morgan Stanley investment. These returns will be achieved as long as the stock is above the $175.00 strike price at assignment. If the stock declines below the strike price, the breakeven price of $171.65 ($181.43 - $8.63 - $1.15) provides 5.4% downside protection below the stock purchase price.
At least eight of the nine metrics used in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet must be 'YES' prior to establishing a position. As shown below with this Morgan Stanley position, all nine criteria were met.
