Merck (Turbo) Calls with High Returns on Reaching Previous Highs - 10/21/2024

Short Term

Tradingchance notes that Merck (MRK) stock has been stuck in a narrow trading range for the past few months. However, the stock is now approaching a key resistance level at $92.50. If MRK can break above this level, it could be poised for a significant rally.

To capitalize on this potential opportunity, Tradingchance is recommending a bullish call spread strategy. This strategy involves buying a call option with a strike price of $95 and selling a call option with a strike price of $100, both expiring on January 20, 2023.

The maximum profit for this strategy is $5 per share, which is the difference between the two strike prices. The maximum loss is limited to the premium paid for the call options, which is currently around $1.50 per share.

Long Term

In the long term, Merck (MRK) stock is expected to continue to perform well. The company has a strong pipeline of new drugs and is expected to benefit from the aging population.

To capitalize on this long-term growth potential, investors may want to consider buying and holding MRK stock. The stock is currently trading at around $90 per share, which is a discount to its 52-week high of $95.50.

Investors who are bullish on MRK stock may also want to consider selling covered calls. This strategy involves selling a call option against shares that you own. If the stock price rises, the call option will be exercised and you will be obligated to sell your shares at the strike price.

Selling covered calls can generate additional income and can also help to reduce your overall risk.

Disclaimer

The information provided in this article is for informational purposes only and should not be construed as investment advice. Trading options can be risky and you should always consult with a qualified financial advisor before making any investment decisions.