MRK

O

oldnemesis

http://finance.yahoo.com/news/merck-beats-2q-profit-forecasts-105330501.html

http://finance.yahoo.com/chart/MRK

http://www.msn.com/en-us/money/stockdetails/financials/fi-126.1.MRK.NYS

http://finance.yahoo.com/m/a2d41c14...a0baac5/ss_merck-results-underscore-need.html

http://finance.yahoo.com/news/merck-mrk-updates-outlook-following-141402777.html

Trade:
with MRK at 58.66
Jan '17 40/45 bull call spread for a net debit of $420
Yield = 80/420 = 19% in 175 days or 39.7% annualized.
(Since this is a debit spread I should also include the cost of investing $420 for 175 days...but I won't since my account has idle money and interest rates are so low)
Prob = 98%
Expectation = .98(80) - .01(420) - .01(210)= 78.4 - 4.2 - 2.1 = 71.9

Price...... Profit / Loss...... ROI %
30.00........... (420.00)...... -100.00%
35.00........... (420.00)....... -100.00%
40.00........... (420.00)....... -100.00%
44.20................ 0.00............. 0.00%
45.00.............. 80.00............ 19.05%
50.00.............. 80.00............ 19.05%
55.00.............. 80.00............ 19.05%
60.00.............. 80.00............ 19.05%
70.00.............. 80.00............ 19.05%

https://en.wikipedia.org/wiki/Merck_&_Co.
 
Last edited:
syswizard said:
Pharma and Biotech have had quite the run recently.
Time to think "short".
At least in the short-term (1-3 months).
More...


Really?

http://finance.yahoo.com/chart/xph

Actually the pharmaceutical ETF is at a trough and looks like it might be bottoming (2 year graph).

Of course you can play lots of games with graphs and come to a variety of conclusions. It depends on what 'recently' means. It's called market timing and usually isn't very productive.

I realize MRK is up a little from where it was 'recently' but looking at a 2 year graph the trade is below support.

It wouldn't change my mind either way.

I base the trade on MRK's immediate prospects from a fundamental perspective rather than a market timing perspective, and have left enough room (I hope) for market gyrations.

Note that MRK is a Zack's hold, while BMY,JNJ and LLY are rated buy. So Zack's thinks it's big pharma buy time. (Zack's has been wrong before)

We'll know who's future predictor is 'right' in Jan.
 
Last edited:
You must log in or register to reply here.
Back
Top