Schaeffer's Trading Floor Blog

Stocks to Watch Friday: Merck & Co., Inc., Deere & Company, and Toyota Motor Corp (ADR)

Analyzing MRK, DE, and TM ahead of tomorrow's trading

by 4/10/2014 4:59 PM
Stocks quoted in this article:

Momentum names that made notable moves on Thursday and could continue to do so into Friday's session include pharmaceutical firm Merck & Co., Inc. (NYSE:MRK), machinery concern Deere & Company (NYSE:DE), and automaker Toyota Motor Corp (ADR) (NYSE:TM). Here is a quick look at these stocks ahead of tomorrow's opening bell.

Merck & Co., Inc. (NYSE:MRK)

Merck shot to a fresh six-year peak of $58.14 this morning, after the company announced the high success rate of its recent hepatitis C drug trial. By the close, however, the stock had made its way 2.2% below the flat line to trade at $55.85. As such, MRK options traded at a rate that nearly tripled the daily average, with put volume slightly outnumbering call volume. The most active MRK option of the day, however, was the April 55 call, where a block of about 2,300 contracts was bought to open, indicating the speculator expects Merck to extend its momentum atop $55 through front-month options expiration next week.

Deere & Company (NYSE:DE)

Deere scored a new annual high of $94.58 today, before closing the session slightly lower at $92.74. In DE's options pits, meanwhile, put volume outnumbered the expected daily amount by a more than 6-to-1 margin, though a healthy portion of the action consisted of a neutral-to-bullish play. Specifically, it appears one trader constructed a bull put spread at the April 90 and 92.50 strikes, amid expectations DE will remain north of $92.50 through next Friday's close. The equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 4.58 ranks higher than all comparable readings from the past year, indicating calls have been bought to open over puts at an annual-high rate recently. Some of this call action, however, may have come at the hands of short sellers hedging their bearish bets, as the current amount of short interest on DE represents more than a week's worth of pent-up buying demand, at the stock's average pace of trading.

Toyota Motor Corp (ADR) (NYSE:TM)

Toyota's global recall continued to negatively impact the stock through today's session, where it fell an additional 4% to close at $103.39 -- just a penny north of the equity's annual low of $103.38, tagged early today. Overall options volume on TM sprung to about three times to average daily amount, with most of this activity coming from the put side. To be more specific, the five most active strikes in TM's options pits today were all puts from the April and May series of options.

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