Bullish Case: Merck's oncology portfolio, driven by Keytruda's continued market dominance and upcoming FDA approvals, positions it for significant growth despite competition. Recent acquisitions enhance its pipeline, creating optimism for long-term returns.

Bearish Case: Increased competition for Keytruda and declining demand for Gardasil in Asia pose immediate threats. Patent expirations and regulatory challenges could further pressure stock performance, undermining investor confidence.

Potential Outcomes:

1. (60%) Keytruda continues growth enhancing Merck’s revenue.

2. (20%) Patent expirations cause revenue declines.

3. (15%) Competition erodes market share leading to stock price drop.

4. (5%) Unexpected regulatory hurdles slow pipeline progression.

Trading Oracle: Consider bullish credit spreads using short-dated puts (e.g., sell $102 puts, buy $95 puts expiring in 7 days) for high probability of profit at 68%. Alternatively, utilize vertical spreads targeting strikes aligned with stable volatilities, capturing premium effectively over the near term.

November 05, 2024