Tony Zhang Sees Unusual Options Activity In Morgan Stanley

On CNBC's "Options Action," Tony Zhang said Morgan Stanley MS traded pretty actively on Monday as over 80,000 contracts traded. That is more than two times the average daily volume.

While the stock was down over 3% on Monday, the 30-day front-month implied volatility rose by more than 20%. So a trader decided to take advantage of elevated implied volatility by selling 19,000 contracts of the October $90 puts for $1.30. The trade accounts for almost a quarter of all the contracts traded on Monday in Morgan Stanley.

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These puts are about 9% out of the money and if the stock stays above $90 at the October expiration, the trader is going to make around $2.5 million. If Morgan Stanley closes below $90 at the October expiration, the trader will have to buy the stock at $90.