I bought Merck Puts yesterday

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Anonymous said:
This is like the 5th time I posted this. Watch it will be deleted in time
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The last time they deleted posts was right before the last round of Layoffs. During that time period anything with the word "layoffs" in the title got deleted. It only happened on the Merck Thread. Not on any other thread. I tested it.
 
















I'm no pro trader but when you buy puts with a Jan 15 (I think you meant 14) expiration it means that you can buy the stock @ $45 between now and then. So if it goes over $45 you buy at strike and sell for the higher amount. Right?

I think you can also actually trade the put. Let's say you bought it for $3/ share. If the stock goes over $45 by a moderate amount, the put can become worth, let's say $5/ share. So whichever spread is greater is the trade you make - the shares or puts.

Hopefully watching CNBCs Options Action the last few weeks has helped me understand these trades.
 




Anonymous said:
Do you think the stock is going down? If we do lay people off doesn't that make the stock go up? honest question. I actually believe the hype. I just don't know about the stock dropping over it.
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If Merck lays off in house staff The stock will rise. If they layoff sales reps, especially in the diabeties area, the stock will at first rise but then look out below. The trajectory of Januvia is negative due to over promotion and being out gunned by the competition. 3 New DPP4s will enter the market in 2014 which will add synergy to the downward slide. Good luck to all.
 




I wouldn't be too smug, you have a 50/50 chance of losing your entire investment. The stock has to lose 16% before you even break even. With the company still buying back a lot of stock it is possible that even with bad quarterly reports the stock may not fall that far.
 




Anonymous said:
I wouldn't be too smug, you have a 50/50 chance of losing your entire investment. The stock has to lose 16% before you even break even. With the company still buying back a lot of stock it is possible that even with bad quarterly reports the stock may not fall that far.
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Um, when you buy puts you're buying an option contract - a few dollars a 'share'. You're not buying the actual stock. You can make decent money on options and, if you don't buy hundreds of dollars of contracts, even if you lose, it's a relatively small amount of money to be out.
 




I bought the puts. Upon the announcement of the mass firing, the stock will rise marginally, as they always do. Shortly thereafter, it will start to fall. If this stock is $40 a year from now I'll be surprised. 2014's revenue destruction will overpower any savings on salaries and then some. Oh, and Januvia is indeed about to tank. A 100% drop isn't out of the question, given its safety concerns. That's just one of Merck's problems. Wait until the Zetia failure hits. Zetia sales will drop by 75% in one quarter. And new product launches? Hey, how's that Liptruzet going? A real breakthrough. Juvisync, Part 2...

This company is in big trouble and management knows it. I would cut the sales force by 80% and retain only the CSO people.
 




Anonymous said:
I bought the puts. Upon the announcement of the mass firing, the stock will rise marginally, as they always do. Shortly thereafter, it will start to fall. If this stock is $40 a year from now I'll be surprised. 2014's revenue destruction will overpower any savings on salaries and then some. Oh, and Januvia is indeed about to tank. A 100% drop isn't out of the question, given its safety concerns. That's just one of Merck's problems. Wait until the Zetia failure hits. Zetia sales will drop by 75% in one quarter. And new product launches? Hey, how's that Liptruzet going? A real breakthrough. Juvisync, Part 2...

This company is in big trouble and management knows it. I would cut the sales force by 80% and retain only the CSO people.
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You forgot about our Hep C franchise. It's about to get clobbered by Gilead. At least a 50% haircut there.
 




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