Merck calls lead puts 10:1
Merck calls lead puts 10:1. The stock up 78c to $69.15 and 10.6K Jan 70 - 72.5 call spreads bought for $1.12. While the spread is possibly a bullish earnings play - the company is due to report 10/25 - trade history shows a matching block of Jan 70 calls opened at $2.78 on 8/20. The call write rolled from Jan 65s with shares at $69.61 at that time. It's likely that the short calls are now being rolled to the higher 72.5 strike to adjust an overwrite and monetize the profit on the short 70 calls (which were bought back for $2.64 today). The adjustment expresses the view that shares will see limited upside through early-2019. Nov 70, Nov 75, and Oct 70 calls are next most active in Merck Friday. Total volume is 35K calls and 3.5K puts.