Option Trading in Merck?
I have been watching Merck (MRK) since yesterday. As you probably already know, Merck stock had a massive sell off in October 2004 related to the recall of one its blockbuster drugs. Since that time the stock has been undergoing somewhat of a consolidation from that huge volume washout.
It is looking to me like the current stock chart pattern being created is an ascending triangle. There was also a huge sell off on about 60 million shares in late January, but then a complete reversal of that and rally on 60 million shares in mid February 2004.
Right now it is hovering right under longer term resistance of 32.5. I like the overall set up and the potential here. The key indication for a breakout from this pattern will be the volume in the days ahead at 10:35, 12:45 and then the final volume near the close. The volume should be the clue that Merck stock wants to make a breakout from this pattern. 20 million shares or greater would be perfect.
I am opening up this before and after case with the following.
Merck May 05, 32.50 CALL
with price 1.15
Target is 2.00
also, Merck Stock
with price 32.3
Target is 35.00
P.S. My apologies for not hacking up the chart a bit more. I am currently not on my original computer and had to slap up any chart I could find.
P.P.S. There is a steep trendline that I could not draw in the chart that is important to keep this price pattern intact. I will draw it in later, but for now this will have to do.