This morning Morgan Stanley(MS) issued a "tactical" idea for Bank of America(BAC) (Hat tip to StockBox), urging you to load up on the shares NOW!!
Last week MS registered a new structured note, a three year 10% to 12% Contingent Income Auto-Callable Note due January 25, 2013 based on the Performance of the Common Stock of Bank of America Corporation. I detailed the workings of the nefarious plan investment here. As I mentioned in my post, the investment being sold is a play on the coming volatility in BAC stock, with MS "winning" if the volatility in BAC stock price increases beyond a certain range.
That's why I found this "tactical idea" funny, as I thought MS was plotting to benefit from BAC's downfall. But, according to this call, MS actually thinks BAC is good for a 60 day pump rise in the stock price. This, then is probably ACT ONE in that volatility play.
Wait I forgot, investment banking departments have impregnable force fields known as Chinese walls that are meant to reduce collusion and conflict of interest issues. So obviously, the research department would not have a clue what structured derivatives dept was doing........
what was i thinking?
Perhaps, I read the prospectus wrong, yeah you know what, my bad, I read it wrong. That investment looks a sure bet, get stuck in..!
Or maybe, just maybe they just needed a little stock "boost" before the deal closes on Jan 25th. Count 60 days, first reset day is April 22nd, that leaves a 30 day window for........?
I'm not a cynic...... much. I know what I think, but the name of this game is think and analyze for yourself.
Happy Trading.
On to the good stuff:
Morgan Stanley: Buy Bank of America Now
From MS:
BAC.N, Bank of America ($14.40) /Research Tactical Idea
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