If the venerable Goldman Sachs trading mavens think Merck's shares reflect too much value, at $37 (given the $10 billion potential in three years' lost sales from a bad J&J arbitration outcome), who am I to disagree?
Benzinga gets credit for this fascinating tip:
. . . .Goldman, Sachs & Co. is. . . suggesting buying puts on Merck as a hedge to long shares through the company's arbitration process.
The analyst believes that the stock is already pricing in a favorable outcome for Merck, noting that options prices are at a three-year low, which makes them a good way to hedge the overdone shares.
The analyst suggested buying the November $35 put for $0.59 on newpositions and rolling the previously long Oct. $36 put at this time, which was previously suggested as a long hedge. . . .
If Goldman is right, and Merck is trading assuming a positive arbitration result, what on Earth will be the damage -- if Merck doesn't prevail?
$30, or $31? 29?
I dunno. Yikes.
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