Merck (MRK) Options Signal Bullish Breakout: Call Dominance and Whale Moves at $110 Put Set Stage for 2026 Rally

• Merck trades at $110.93, down 0.08% from $111.01, with volume surging to 4.9 million shares.
• Options market shows 0.67 put/call open interest ratio, with heavy call OI at $111–$120 strikes and massive put OI at $70–$100.
• Block trades in MRK20260123P110 and MRK20260123P108 suggest institutional hedging ahead of Friday’s expiry.

The stock is caught in a tug-of-war between bullish momentum and bearish caution—but the options data leans decisively toward a breakout.Bullish Imbalance in Options and Whale Moves at $110 Put

The options market is screaming: calls are in control. For Friday’s expiry, the top OTM calls cluster between $111 and $120, with 2,154 open contracts at $111 and 3,333 at $120. This suggests traders are pricing in a potential push above $111, the intraday high. Meanwhile, puts are heavily weighted at $100 and below, with 8,315 open contracts at $100 and 11,824 at $75. The imbalance? A classic sign of a market bracing for a rally but hedging against a sharp drop.

But here’s the kicker: block trades in MRK20260123P110 (1,500 contracts) and MRK20260123P108 (1,000 contracts) hint at big players hedging their positions. These puts, expiring Friday, could signal a last-ditch effort to lock in profits if the stock dips. Yet the sheer volume of call open interest—especially at $111 and $113—suggests the bulls are ready to push higher. The risk? If MRK fails to break $111, the puts could trigger a short-term selloff.

News Flow: Pipeline Wins vs. Patent Risks

Merck’s recent headlines are a mixed bag. The $70 billion long-term revenue target and $1 billion in Winrevair sales validate its pivot to cardiometabolic and respiratory drugs. Capvaxive’s dominance in pneumococcal vaccines and Enlicitide’s FDA filing in 2026 are major tailwinds. But the elephant in the room? Keytruda’s 2028 patent expiration and declining Gardasil sales in China. Analysts are split: some see Merck’s M&A and pipeline as a lifeline, others worry about near-term revenue gaps. The options market seems to agree—calls dominate, but the heavy put OI at $100+ shows investors aren’t ignoring the risks.

Actionable Trade Ideas: Calls for Breakouts, Puts for Hedging

For options traders, the most compelling plays are:

• Bullish Call Plays: Buy MRK20260123C111 or MRK20260123C113 (Friday expiry). If MRK breaks $111, these strikes could see rapid gains. For longer-term exposure, MRK20260123C115 offers leverage if the stock surges past $115.
• Bearish Put Plays: Buy MRK20260123P110 or MRK20260123P108 to hedge against a drop. These strikes align with block trades and could act as a safety net if the stock dips below $108.50.

For stock traders, consider entry near $110.50 if support holds. Target $113 as a short-term goal (aligning with Bollinger Upper Band at $113.56) and $115 for longer-term bullish bets. A stop-loss below $108.45 (intraday low) would protect against a breakdown.

Volatility on the Horizon: Positioning for Merck’s 2026 Pivotal Moves

The coming days will test Merck’s resolve. With Keytruda Qlex approved, Winrevair hitting $1B in sales, and Enlicitide on the horizon, the fundamentals are strong. But the options market is pricing in a near-term breakout. If MRK can hold above $110.50 and push past $111, the bulls will take control. If not, the puts at $100+ could drag the stock lower. Either way, this is a stock to watch—and trade—with precision. The key takeaway? Position for a rally but hedge against the patent cliff.