Options Traders Blitz Merck & Co., Inc. (MRK) After Earnings, Keytruda Win

Merck & Co., Inc. (MRK) is seeing accelerated options trading, after the biotech's cancer drug victory and an earnings beat

Oct 25, 2016 at 12:12 PM
facebook X logo linkedin


Options are popping on Merck & Co., Inc. (NYSE:MRK) as the Dow stock rises, following the drugmaker's better-than-expected earnings report. Specifically, MRK beat on the top and bottom lines, thanks to rising sales for both vaccines and MRK's lung cancer drug, Keytruda. Adding to the bullish buzz, Keytruda was granted early U.S. approval yesterday for use in previously untreated cancer patients, while MRK also lifted its full-year forecast.

Against this backdrop, MRK is trading 1.8% higher at $61.82, bringing its total year-to-date gains to 17%. Helping the stock higher has been its 80-day moving average, which has been lifting MRK shares since early March. However, MRK has been trapped in the $61-$64 range since an early August bull gap.

As touched upon, MRK options are crossing the line at twice their usual intraday clip. And with 23,200 options on the tape, volume is on pace to arrive in the 96th percentile of its annual range. Drilling down, calls are outnumbering puts, with almost 14,000 of the former and 9,500 of the latter traded at last check.

While the January 2018 62.50-strike call is today's most active option, the weekly 10/28 60-strike put has garnered notable attention among post-earnings options traders. According to data from the International Securities Exchange (ISE), a significant amount of sell-to-close activity has been detected here, as traders close out of their positions ahead of expiration at this Friday's close.

Widening the scope, puts have been popular among near-term traders, with MRK's Schaeffer's put/call open interest ratio (SOIR) of 1.63 currently at an annual peak. In other words, traders haven't been more put-biased toward options expiring in three months or less in the past 12 months.

However, options buyers have been quick to scoop up calls over puts in recent months. MRK's 50-day call/put volume ratio at the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 3.55, higher than 94% of all other readings from the past year.

Diving deeper, MRK's top front-month open-interest positions are the November 65 call, followed by the November 62.50 call. With a lofty 32,068 contracts collectively outstanding at these two over head strikes, this could exacerbate resistance for the shares of Merck & Co., Inc. (NYSE:MRK) in the near term.

Find out where the Dow lands right after the closing bell. Sign up now for Schaeffer's Market Recap

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI