Why Merck trader is selling calls
Chris McKhann | firstname.lastname@example.org
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.