Big pharma is usually a slow-money sector, but one investor wants to make a quick buck in drug maker Merck.
optionMONSTER's Heat Seeker monitoring program detected the purchase of 3,738 Weekly 47.50 calls expiring this Friday for $0.76. An equal number of the Weekly 47.50 puts was sold simultaneously for $0.77. Volume was more than 30 times open interest at both strikes, indicating that a new position was initiated.
The investor collected a credit of $0.01 from the put sale and now controls the equivalent of 373,800 shares through the long calls . The trader can theoretically earn infinite profits above $47.50 but will lose money below that level. (See our Education section for more on how to generate leverage with options.)
MRK fell 0.79 percent to $46.70 on Friday. The stock has been following the broader market higher and is up 14 percent so far this year, despite lackluster results. It's also been finding support at its 50-day moving average, which could make some momentum traders think that it will keep climbing.
Total option volume was twice the daily average in the session, according to the Heat Seeker.
More From optionMONSTER
- Capstead pullback brings out buyers
- Bull sees tide turning in Two Harbors
- Activision gets big vote of confidence