3 Options Trades You'll Get Paid to Make
Bryan Perry, August 12, 2009
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Naked Puts -- Merck (MRK)
Before you make a single high-yield investment, you must read this.As earnings season unfolds, I like seeing which companies post much better-than-expected numbers, where the underlying stock reacts strongly to the news, as if the story for the company, in this case Merck (MRK), has changed materially.
Just like the technical textbook teaches, after Merck shares gapped higher, they have spent the past two weeks consolidating, back and filling, setting up the stock for the next move higher. Once the stock kissed the 20-day moving average, it turned back up, just like the rule book says it should. It's right at this reversal point for the stock that traders want to sell naked puts against the stock.
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