Merck Stock Eyes Sixth Straight Weekly Win on Heels of FDA Approval

Merck stock is showing a larger-than-usual put-skew among options traders

Managing Editor
Dec 20, 2019 at 11:48 AM
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Pharmaceutical name Merck & Co., Inc. (NYSE:MRK) is up 1.4% to trade at $91.30 this morning, just off a roughly 20-year high of $92.64 and pennies from the record peak from 2000, on the heels of a drug approval from the Food and Drug Administration (FDA). Specifically, the FDA passed Merck's vaccine Ervebo, a preventative drug for the deadly virus Ebola. 

Over the past 12 months, MRK added 24%, with a layer of support stemming from the 20-day moving average for a majority of 2019. Now back trading in record-high territory, Merck stock is eyeing its third straight daily gain, and sixth straight weekly win.

Daily MRK with 20MA

Digging deeper, the stock's Schaeffer's put/call open interest ratio (SOIR) comes in at 1.23, and ranks in the 98th percentile of its annual range. In simpler terms, this shows a larger-than-usual put-skew among options traders.

Lastly, short-term options premiums on Merck stock look relatively cheap at the moment, based on the equity's Schaeffer’s Volatility Index (SVI) of 15%. This ratio ranks in the 12th percentile of its annual range, meaning those looking to speculate on MRK with options, should do so now.


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