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Trump Targets Pharma Pricing: Here’s an Options Setup for Merck

By:Errol Coleman

The company, with its defensive positioning and strong fundamentals, is a prime candidate for short premium exposure

  • Trump has signaled a renewed push to enforce “most favored nation” drug pricing, which could slash US pharma margins.
  • Major pharmaceutical stocks like Pfizer and Merck held up surprisingly well, showing short-term strength.
  • The overreaction from headline risk can create high-probability options trades; consider a short put strategy.


In a fiery post on Truth Social, President Donald Trump once again took aim at Big Pharma, promising US citizens would no longer pay inflated drug prices compared to the rest of the world. He announced an executive order focused on a “most favored nation” clause, which would require US prices match the lowest global prices for the same medication.

This could pose a serious long-term threat to pharmaceutical companies, whose profits have traditionally relied on US market pricing power. However, in a surprise move, many large-cap pharma stocks actually rallied after the announcement. That tells us something: The market might see this as noise for now or believes the order is more bark than bite.

Curious how implied volatility creates opportunity? Read this volatility primer.


Trade idea: Sell puts in Merck

Merck (MRK), a pharma heavyweight with strong R&D and, blockbuster drugs like Keytruda, pays shareholders a solid dividend. Despite regulatory headwinds, it remains fundamentally strong — and it's trading near multi-month support.

Put Selling Setup:

  • Stock Price: ~$74
  • Trade: Sell the July 18 $65 Put
  • Credit Received: ~$1.41
  • Break-even Price: $63.59


This works because it collects premium on market overreaction, and it’s ositioned near technical support. Merck's dividend and defensive nature make it an attractive assignment.

This is a classic neutral-to-bullish play — you either keep the premium or get assigned shares of a blue-chip company at a discount. It's the kind of trade that benefits from headline-driven fear, while trusting the market to settle back to logic.


Final thoughts

Trump’s pharma crackdown rhetoric may spike short-term volatility, but institutional investors aren’t selling off just yet. That creates strategic opportunities for options traders who can read between the lines. Merck, with its defensive positioning and strong fundamentals, is a prime candidate for short premium exposure while the dust settles.


Errol Coleman appears on the tastylive network shows Today’s Assignment and Trades on the Go.

For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and #tastyliveTrending for stocks, futures, forex & macro. 

Trade with a better brokeropen a tastytrade account today. tastylive Inc. and tastytrade Inc. are separate but affiliated companies. 



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