MRK Options Signal Bullish Bias Ahead of Earnings: $140 Calls and Keytruda Momentum

• Merck (MRK) is trading at $127.485, showing short-term bullish momentum despite a slight intraday dip.
• Options market shows heavy call interest at $140, suggesting traders are positioning for a post-earnings breakout.
• Q2 earnings on August 4th are expected to highlight new product launches offsetting margin pressures.
• Technical indicators like MACD and RSI support continued upward pressure toward resistance levels.

It’s that time of the week again where the market holds its breath. Merck is sitting just below $128, and while the stock dipped slightly today, the underlying sentiment in the options market tells a different story. We’re on the eve of Q2 earnings, and the smart money isn’t hedging for a crash. Instead, they’re buying the dip with conviction. The data suggests that while there’s immediate volatility, the path of least resistance leans upward, provided the earnings report doesn’t shatter expectations. Let’s look at where the money is actually flowing.

Whales Are Betting on $140

When you look at the open interest, the message is loud and clear. For this Friday’s expiration, we see significant open interest in OTM calls at the $132 and $140 strikes. But the real signal comes from the longer-dated options. Next Friday, the $140 call has a massive open interest of 1,099 contracts. That’s not just noise; that’s a target.

The put/call ratio for open interest is around 0.82, which is comfortably below 1.0. This indicates a bullish skew. Traders are buying more calls than puts, signaling confidence in an upside move. Meanwhile, the put side is clustered lower, around $116 and $124, which acts as a safety net. If the stock drops, these levels are where buyers are stepping in.

Block trading data reinforces this bullish bias. We saw large call purchases in MRK20260821C130 and MRK20260814C133. These aren’t small retail trades; they’re institutional-sized bets on near-term upside. The $130 strike for August 21st is particularly interesting because it’s close to current prices, suggesting traders expect a move above $130 within the next two weeks. The $140 call for January 2027 also saw activity, indicating long-term confidence in the company’s valuation.

Earnings Could Be the Catalyst

The narrative around Merck is shifting from fear of a "Keytruda cliff" to optimism about lifecycle extensions. The upcoming earnings report is scheduled for August 4th, just after market close. Consensus estimates point to sales of $16.33 billion, but the real story is the subcutaneous version of Keytruda (Qlex). Analysts believe this new formulation will help preserve revenue momentum and extend exclusivity benefits through 2039.

This news flow aligns perfectly with the options positioning. If earnings beat on the top line or provide strong guidance on Qlex adoption, the stock could easily surge toward the $140 strike that options traders are so eager to buy. Conversely, if there are margin pressures or weaker-than-expected Keytruda demand, the stock might test the $120 support level. But given the heavy call buying, the market is pricing in a positive outcome.

Trading Opportunities

So, what does this mean for your portfolio today?

For stock traders, the setup is favorable for a long position on dips. Consider entering near the current price of $127.485, with a stop-loss below the 30-day support at $126.72. Your target should be the 200-day moving average resistance around $130.38, with a secondary target at the $133.48 Bollinger Band upper limit. If the stock breaks above $131.47, it could quickly move toward $135.

For options traders, the risk/reward looks best on the call side.

• Aggressive Trade: Buy MRK20260807C128. This contract is close to the money and offers high leverage if the stock rallies sharply before expiration. The open interest of 400 contracts suggests liquidity is sufficient to enter and exit easily.
• Balanced Trade: Buy MRK20260814C133. This is a slightly further OTM call with a turnover of $214,500 in block trades. It gives you more time for the thesis to play out while still capturing upside if the stock breaks above $133.
• Conservative Trade: Consider a bull call spread buying MRK20260821C130 and selling MRK20260821C140. This reduces the cost of the trade and limits risk, capitalizing on the strong open interest at the $130 and $140 strikes.

Avoid the puts unless you’re hedging. The put volume is lower, and the $116 strike is too far OTM to be a cost-effective hedge for a short-term trade.

Volatility on the Horizon

Merck is at a pivotal moment. The technicals are bullish, the options market is betting on upside, and the fundamental catalyst of Q2 earnings is just around the corner. While there’s always risk with earnings, the data suggests the probability leans toward a positive move. Keep an eye on the $130 level. If it holds, the path to $140 is wide open. If it breaks, don’t panic; the support at $120 is strong. But for now, the bulls are in control, and the options market is telling us to pay attention to the $140 target.