PFE Analysis

Pfizer Inc. (PFE)

Update 1/31/2017: Prices rose then dropped back after earnings wee published. Implied volatility fell sharply. I chose to exit PFE because it goes ex-dividend on Feb. 1, and i’m wanting to avoid the likelihood of early assignment.

Shares rose by 0.8% over one day, or a +281% annual rate. The options position produced a 6.6% yield on debit for a +2,413% annual rate.


 

PFE publishes earnings on Tuesday before the opening bell.

I shall use the MAR series of options, which trades for the last time 46 days hence, on March 17.

Implied volatility stands at 20%, which is 1.6 times the VIX, a measure of the volatility of the S&P 500 index.

PFE’s IV stands in the 40th percentile of its annual range and the 57th percentile of its most recent broad movement.

The price used for analysis was $31.13.

Premium: $1.29 MAR iron fly
PFE   Odds Delta
Calls
Long 33.00 88.3% 13
Break-even 32.29
Short 31.00 51.6% 51
Puts
Short 31.00 48.4% 49
Break-even 29.71
Long 28.00 89.6% 9


The risk/reward ratio is 1.3:1.

Decision for My Account

I have entered a position on PFE as described above. The stock at the time of entry was priced at $31.12.

By Tim Bovee, Portland, Oregon, Jan. 30, 2017

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