Investing in Morgan Stanley with a Weekly Put Selling Strategy and Dollar-Cost Averaging

Since the end of November 2023, I’ve been actively trading Morgan Stanley (MS) stock with great success. At one point, I held around 24 shares, which I eventually sold after the stock reached my price target of approximately $100 per share, realizing substantial gains. 

However, my journey with MS doesn’t end there. I’ve decided to start over, this time with a focused plan to grow my holdings to 100 shares, enabling me to write covered calls. Here’s how I’m combining selling weekly puts and dollar-cost averaging to achieve this goal.

Why Morgan Stanley?

Morgan Stanley has been a cornerstone of my portfolio due to its strong financial performance, consistent dividend payouts, and overall market resilience. My previous trades with MS have proven fruitful, reinforcing my confidence in this stock as a long-term investment. As I embark on this new challenge, my strategy is clear: accumulate shares methodically while generating additional income through options trading.

The Strategy: Selling Weekly Puts

Selling weekly puts has been a key component of my MS trading strategy. Here’s how I plan to continue leveraging this approach:

  1. Strike Price Selection: Each week, I’ll sell put options with a strike price slightly below the current market value of MS. This strike price represents my target purchase price, allowing me to buy the stock at a discount if it falls to this level.
  2. Premium Collection: By selling these put options, I collect premiums, adding immediate income to my portfolio. If the stock doesn’t drop below the strike price, I simply keep the premium and repeat the process the following week.
  3. Stock Assignment: Should the stock drop below the strike price, I’ll be assigned the shares, purchasing them at the lower price point. This aligns perfectly with my dollar-cost averaging (DCA) strategy, as it allows me to acquire shares at different price levels.

Dollar-Cost Averaging: Buying 1 Share Per Week

Alongside selling puts, I’m committed to purchasing one share of MS each week. This dollar-cost averaging approach helps me steadily accumulate shares, reducing the risk associated with market timing. By buying shares at regular intervals, I ensure that my average purchase price remains balanced, allowing me to build my position in MS consistently over time.

The Road to 100 Shares

Why 100 shares? Reaching this threshold is essential for my plan to write covered calls—a strategy that involves selling call options on shares I own. This approach can generate additional income and provide downside protection. With my initial goal of 24 shares successfully reached and sold at a profit, I’m now focused on growing my holdings back to 100 shares. Last Friday, I sold all my MS shares to reset my position, providing a fresh start for this challenge.

Conclusion

Investing in Morgan Stanley through a combination of selling weekly puts and dollar-cost averaging is a well-rounded strategy that aligns with my long-term goals. With my previous success in trading MS, I’m confident in my ability to grow my position to 100 shares, enabling me to write covered calls and further enhance my portfolio’s performance.

As I continue to navigate the market, this strategy will be regularly reviewed and adjusted to ensure it remains aligned with my investment objectives. By consistently acquiring shares and leveraging options, I’m laying the groundwork for sustained growth and income generation in my Morgan Stanley investment journey.