OptionsHouse

Options Trading News

January 27, 2014  Mon 11:06 AM CT

MRK: SEE CHART GET CHAIN FIND STRATEGIES
Merck is fighting today's market downtrend, but call selling sees limited upside in the pharmaceutical giant.

optionMONSTER systems show that a trader sold 11,500 March 55 calls for the bid price of $0.90. This is clearly a new position, as open interest in the strike was just 1,404 contracts before the trade appeared.

Almost exactly a minute later, a print 414,000 MRK shares was bought for $53.5278. Combined with the short calls, this creates a delta-neutral play that is betting on lower volatility than that implied by the options' premiums in coming weeks. (See our Education section)

MRK is up 2.43 percent to $53.24 in midday trading after hitting a new 52-week intraday high of $54.10 this morning. The drug developer was below $48 a month ago. 
Share this article with your friends


OptionsHouse

Premium Services

Education & Strategy

Basics of synthetic positions

Before we get into the 6 basic synthetic positions, there are some basic principles that are necessary to review and make it easier to understand Synthetic Positions. By clearly understanding these concepts, Synthetic Positions become rather easy...

View more education articles »