Quantchabot has detected a promising Bear Call Spread trade opportunity for MERCK (MRK) for the 20-Jan-2023 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
MRK was recently trading at $87.51 and has an implied volatility of 24.18% for this period. Based on an analysis of the options available for MRK expiring on 20-Jan-2023, there is a 30.99% likelihood that the underlying will close within the analyzed range of $77.02-$87.51 at expiration. In this scenario, the average linear return for the trade would be 97.71%.
Trending on StockTwits: StockTwits® is a financial communications platform for the financial and investing community. On their site, MERCK was recently trending, indicating that breaking news and/or market activity has significantly impacted sentiment toward the stock. This movement can be interpretted as a sign of more near-term price movement for the underlying.
Trade approach: The recent sentiment change in MRK on StockTwits appears to be moderately negative, indicating that the stock is likely to follow in that direction for investors trading on sentiment. As a result, a bearish strategy could prove effective if the sentiment ultimately turns out to drive trading.
Upside potential: Using this bearish strategy, the trade would be profitable if MERCK closed at or below $87.65 on 20-Jan-2023. Based on our analysis, there is a 47.30% likelihood of this return.
Downside risk: As with any options trade, there is a substantial downside risk where you may lose most or all of your investment.
To analyze this trade in depth, please visit the Quantcha Options Search Engine.