Merck is exploding higher today, and the bulls think that it
still has room to run in the near term.
optionMONSTER's Heat Seeker monitoring system detected the purchase
of about 3,000 January 52.50 calls for $0.46. A similar number of
January 50 calls was sold at the same time for $1.57 against
previous open interest, which suggests that an existing long
position was closed and rolled to the higher strike.
lock in the price where a stock can be purchased, letting investors
cheaply control a move higher. Capital can also be transferred from
one contract to another as shares climb, freeing up cash along the
way while preserving the upside exposure. Today's transaction
recovered $1.11. (See our
MRK is up 5.95 percent to $52.85 in afternoon trading after
positive clinical trial data for its vorapaxar anti-clotting
compound was posted on the Food and Drug Administration's website.
The treatment goes before an advisory committee for review later
The stock is back to its highest level since early 2008. Other
health-care and pharmaceutical names including Xoma and Mast
Therapeutic have also seen bullish activity today.
Overall option volume is 6 times greater than average in MRK so far
today, according to the Heat Seeker. Calls account for almost
three-quarters of the total.
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