Quantchabot has detected a promising Bull 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 $106.73 and has an implied volatility of 20.41% for this period. Based on an analysis of the options available for MRK expiring on 20-Jan-2023, there is a 34.17% likelihood that the underlying will close within the analyzed range of $107.43-$116.59 at expiration. In this scenario, the average linear return for the trade would be 10.05%.
52 week high: MERCK recently reached a new 52-week high at $107.30. MRK had traded in the range $71.50-$105.87 over the past year.
Trade approach: Reaching a new 52-week high is a bullish indicator, so this trade is designed to be profitable if MRK maintains its current direction and does not revert back to pricing on the bearish side of $106.73 on 20-Jan-2023. If possible, the trade has been padded such that slight movement against the trade would still return a profit.
Upside potential: Using this bullish strategy, the trade would be profitable if MERCK closes at or above $105.04 on 20-Jan-2023. Based on our risk-neutral analysis, there is a 60.82% 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.