New Pfizer Options Trading Highlights Potential Investment Strategies

Investors in Pfizer Inc (Symbol: PFE) noticed the start of new options trading today for the December 2027 expiration date. The time value is crucial for determining an option buyer’s willingness to pay. With 983 days until expiration, the newly initiated contracts offer a chance for put or call sellers to secure a higher premium compared to nearer-term contracts. Stock Options Channel’s YieldBoost formula has reviewed the PFE options chain, pinpointing one put and one call contract of particular interest.

Put Contract Details at $18 Strike Price

The put contract with a strike price of $18.00 currently has a bid of $1.75. By selling-to-open this put contract, investors commit to buying the stock at $18.00 while collecting the premium, effectively lowering their cost basis to $16.25 (before broker commissions). This alternative may appeal to those already interested in purchasing shares of PFE at the current price of $22.80 each.

Notably, the $18.00 strike price reflects approximately a 21% discount to the present trading price, indicating it is out-of-the-money by that same percentage. Current analysis suggests a 70% chance that this put contract will expire worthless. Stock Options Channel will monitor these odds over time, providing updates on their website under the contract detail page. Should the contract expire worthless, the premium would yield a 9.72% return on the cash commitment or an annualized rate of 3.61%, a figure we refer to as the YieldBoost.

Visual Representation of Trading History

Below is a chart illustrating the trailing twelve-month trading history for Pfizer Inc, with the $18.00 strike position highlighted in green:

Call Contract Insights at $32 Strike Price

Shifting to the call options, the $32.00 strike price contract has a current bid of 71 cents. If an investor buys shares of PFE at the prevailing price of $22.80 each and simultaneously sells-to-open that call contract as a “covered call,” they agree to sell the stock at $32.00. Including the premium collected, this strategy would provide a total return of 43.46% if the shares are called away at the December 2027 expiration (before broker commissions). However, significant upside could be missed if PFE shares experience substantial appreciation, underscoring the importance of analyzing Pfizer’s historical trading history and business fundamentals. Below is a chart of PFE’s trailing twelve-month trading history, with the $32.00 strike highlighted in red:

The $32.00 strike price represents about a 40% premium over the current trading price, meaning it is also out-of-the-money by that percentage. Consequently, there is a 75% chance that this covered call contract will expire worthless, allowing the investor to retain both their shares and the collected premium. Stock Options Channel will also track and publish changes in these odds over time on its contract detail page. If the covered call expires worthless, the premium would contribute a 3.11% increase in return for the investor, or an annualized rate of 1.16%, another aspect of our YieldBoost.

Volatility Analysis

The implied volatility for the put contract example stands at 28%, while the call contract example is at 31%. In contrast, the actual trailing twelve-month volatility, which considers the last 251 trading days along with today’s price of $22.80, is calculated at 23%. For further suggestions on put and call options worth examining, please visit StockOptionsChannel.com.

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Also see:

• Interpublic Group of Companies Average Annual Return
• OIA Average Annual Return
• SOWG Videos

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.