The automated Quantcha Trade Ideas Service has detected a promising trade opportunity for MERCK () for the 20-Apr-2018 expiration period. You can analyze the opportunity in depth over at the .
MRK was recently trading at $55.09 and has an implied volatility of 15.68% for this period. Based on an analysis of the options available for MRK expiring on 20-Apr-2018, there is a 27.02% likelihood that the underlying will close within the analyzed range of $58.57-$71.59 at expiration. In this scenario, the average linear return for the trade would be 196.07%.
Price target: Zacks Research has updated their six-month price target for MRK to $65.08. This price target is a consensus price created from the price targets published by 12 participating analysts whose targets ranged from $54.00 to $72.00.
Mean recommendation: Zacks normalizes analyst recommendations to a 1-5 scale where 1 indicates a strong buy. Their mean recommendation for MRK has been updated to 2.07, which indicates a buy consensus from analysts. Sentiment has moved from 1.79 to 1.79 to 1.86 over the past three months.
Trade approach: The difference between the current price for MRK and the mean price target is $14.91, which represents a 18.14% move (40.22% annualized). Since the 180-day implied volatility for MRK is 17.38%, a bullish strategy could prove effective if the price target ultimately turns out to be accurate.
Upside potential: Using this bullish strategy, the trade would be profitable if MERCK closed at or above $57.62 on 20-Apr-2018. Based on our analysis, there is a 33.06% 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 .
This is an automated post generated based on a market analysis of delayed data at 11/1/2017 9:41:02 AM ET. The analysis does not include brokerage fees or commissions and is not investment advice.