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.
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