When something great goes on sale - we buy it!
Here's the exchange we had in our live Member Chat Room this afternoon:
How do I find out what are the current PFE trades in your portfolios?
What would be a good PFE trade today?
What do you think of the following?
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- Buy 50 PFE 2027 $23 calls for $5.05 ($25,250)
- Sell 50 PFE 2027 $30 Calls for $2.28 ($11,400)
- Sell 25 PFE 2027 $25 Puts for $3.30 ($8,250)
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For a net of $5,600 on the $35,000 spread. Potentially buying 2500 shares at $27.24 vs $25.53.
Would love to hear Warren’s take on it as well.
Thanks.
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We just did a Portfolio Review last week and you hit CTRL+F (“find”) and put in PFE and it goes to all the PFE trades – easy!
I think we have them in 4 portfolios.
With PFE at $25.54 – it’s very tempting to own the stock for the dividends forever more.
50 of the 2027 $23/30 bull call spreads at net $2.77 is $13,850 less the short puts ($8,250) is net $5,600 on the $35,000 spread so very nice – as long as you aren’t taking a big margin hit.
PFE pays $1.68 so $1,680/yr which means if you intend to hold it for 10 years+, this gets interesting:
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- Buy 1,000 shares of PFE for $25.58 ($25,580)
- Sell 10 PFE 2027 $25 calls for $4 ($4,000)
- Sell 10 PFE 2027 $25 puts for $3.35 ($3,350)
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That’s net $18,230 so $18.23/share called away at $25,000 with a $6,770 (37.1%) profit plus 2 x $1,680 in dividends ($3,360) is net net $ $14,870 for $10,130 (55.5%) in upside potential over 2 years and you get to do that for the rest of your life – not bad!