MRK Iron Butterfly — Dec 18, 2026

MRK (Merck & Company, Inc. Common Stock (new)) presents a iron butterfly opportunity with very elevated implied volatility. IV Rank 88. IV 3793.0% trades 1133.0pp above 30-day HV (2660.0%). This setup favors net premium sellers.

Sell the $145 ATM put and the $145 ATM call simultaneously (both at the same strike near the underlying), with long wings further out for defined risk. Higher max profit than a condor but a tighter profit window — ideal when you expect a stalling move into expiration. Underlying ~$145.60, 60 DTE. Max profit $783 per contract, max loss $218, 359.8% return on risk, 25% POP. Breakevens at $137.18 and $152.82.

Management: take profit at ~50% of max profit ($391). Cut at 2x credit ($1565 loss). If short strike is breached with > 14 DTE, consider rolling out for a credit. Close before expiration week to avoid gamma risk.

Underlying: MRK @ ~$145.60 Expiration: Dec 18, 2026 (60 DTE) Net credit (entry): ~$782.50 per spread Legs:

• Sell MRK Dec 18, 2026 $145 Put (delta -0.49, mid $7.67)
• Buy MRK Dec 18, 2026 $135 Put (delta -0.28, mid $3.65)
• Sell MRK Dec 18, 2026 $145 Call (delta 0.51, mid $7.50)
• Buy MRK Dec 18, 2026 $155 Call (delta 0.32, mid $3.70)

Use limit orders at the mid or slightly worse. Verify bid-ask spread (currently ~3.0% of mid) before sending.

Take profit at 50% of max profit ($391). Cut loss if position reaches 2x credit received ($1565 loss). Roll if tested with > 14 DTE remaining.