Merck (MRK) Options Signal Bullish Bias: Key Call Strikes and $140 Target in Focus

• Merck’s stock surges 1.9% to $122.03, outpacing its 30-day moving average of $110.92.
• Options data shows heavy call open interest at $127 (next Friday) and $122, while puts cluster at $120–$121.
• Guggenheim raises price target to $140, citing strong Q4 results and Keytruda growth despite 2026 guidance concerns.

Here’s the core insight: Merck’s options market is leaning hard into a bullish narrative, with call open interest outpacing puts by a 1.5:1 margin. The stock’s 1.9% intraday gain and alignment with technical indicators suggest a short-term breakout is in play—but the real story lies in how traders are positioning for the $140 target. Let’s break it down.

Bullish Calls at $127 and the $140 Target: A Strategic Lock

The options chain for next Friday (Feb 13) reveals a striking concentration of call open interest at the $127 strike (OI: 10,000), dwarfing other strikes. This isn’t just noise—it’s a signal. Traders are betting Merck will test Guggenheim’s $140 target, using the $127 strike as a psychological stepping stone. Meanwhile, puts at $120–$121 (OI: 626–920) hint at cautious hedging, but the put/call ratio of 0.66 confirms the market’s preference for upside.

The absence of significant block trades today means no major whales are moving the needle. But the $127 call OI suggests a coordinated push to lock in gains if Merck breaks above its 200-day Bollinger Band ($117.82). That’s a key level to watch: a close above it could trigger a cascade of call buyers.

News Flow: Upgrades vs. Guidance Woes—Which Wins?

Merck’s Q4 beat and upgraded $140 target are fuel for the bullish case. But the company’s 2026 guidance—$65.5–$67 billion vs. a $67.36B consensus—introduces friction. The $9B acquisition charge and $2.5B in generic competition headwinds are real. Yet, the market seems to be discounting these near-term risks in favor of long-term catalysts: Keytruda’s $31.7B in 2025 sales, Ohtuvayre’s $178M Q4 performance, and the Animal Health segment’s 9% growth.

Investor perception is key here. Merck’s 49% six-month gain (vs. S&P 500) shows a resilient portfolio. The upgrades from Guggenheim and Wolfe Research aren’t just about today—they’re about tomorrow. If the stock holds above $120.44 (intraday low), the $140 target becomes more than a number; it becomes a self-fulfilling prophecy.

Actionable Trades: Calls, Breakouts, and the $120 Floor

For options traders: Buy the MRK20260213C127 call (next Friday) if Merck breaks $122.03. The $127 strike is a high-conviction play, with limited downside if the stock consolidates. For a safer bet, the MRK20260213C122 call (OI: 267) offers a tighter risk-reward profile if the stock tests its 30-day support at $110.92.

Stock traders: Consider entry near $120.44 (intraday low) with a stop just below $119.75 (previous close). The first target is $127 (call-heavy zone), with a stretch target at $140. A collar strategy could pair the MRK20260213P121 put (OI: 571) with the MRK20260213C127 call to cap risk while riding the upside.

Volatility on the Horizon: Balancing the Bull and the Bear

Merck’s technicals and options data tell a clear story: the market is pricing in a breakout. But don’t ignore the risks. The 200D Bollinger Band at $103.76 is a distant floor, and the $2.5B in generic headwinds could weigh on sentiment if the stock falters. That said, the RSI at 69.5 and MACD above its signal line suggest momentum is still with the bulls.

Bottom line: Merck is at a crossroads. The $140 target is within reach, but the path there will require navigating near-term hurdles. For traders with a 1–2 week horizon, the MRK20260213C127 call and a $120.44 stock entry offer the best blend of reward and structure. Just keep an eye on the $120–$121 put-heavy zone—it could signal a shift if the stock stumbles.