During the February flush Merck dipped down to major support near the multi month 2017 lows: https://twitter.com/GarySMorrow/status/962050938444775424. The stock has continued to base since then but has had trouble gaining noticeable traction. Recent option activity paints a more bullish picture for the stock. We remain positive on the current bottoming pattern. Here’s a closer look at Merck’s option activity from Bob von Halle: Over 12,000 May 55 calls have been bought today around $1.95, which is a significant amount of one day activity in this name. That adds to the large open interest in the April 57.5 and April 60 call strike prices that have 17,000 and 13,000 outstanding contracts respectively. Implied volatility is modest at around 19%. Next earnings report not due until May 1st, which will capture today’s activity.
We are long MRK in most managed accounts.