Merck & Co. Inc. (NYSE: MRK) opened at $43.79. So far today the stock has hit a low of $43.79 and a high of $44.93. As of 1:20 this afternoon, MRK is trading at $44.76, up $1.82 (4.2%).The stock has been relatively flat in the mid 40s over the past few months, hitting a one year high of $46.55 in January. Merck shares are trading higher today thanks to a Citigroup analyst predicting strong sales of the new type II diabetes drug Januvia and upgrading the stock to "buy." The technical indicators for MRK have been bearish and steady, but S&P gives the stock a positive 4 STAR buy rating.
For a bullish hedged play on this stock, I would consider an April bull-put credit spread below the $40 range. MRK hasn't been below $40 since August and has shown support around $43. This trade could be risky if the stock loses ground with the dust-up surrounding its cervical cancer vaccine, but even if MRK pulls back some, this position could be protected by the strong levels of support around $41.
Brent Archer is an analyst on the move at Investors Observer. (Free Subscription)
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about.
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