Today’s tickers: PFE, ODP & MRX
PFE - Pfizer Inc. – Signs of bearish sentiment on the drug maker cropped up in Pfizer options on Monday, one day prior to the Company’s fourth-quarter earnings release ahead of the opening bell on Tuesday morning. Pfizer’s shares are down 0.40% to stand at $21.39 as of 11:50 a.m. in New York. In-the-money call selling in the weekly options may mean some traders anticipate a pullback below $21.00 in the price of the underlying by expiration. Traders sold more than 2,500 calls at the Feb. ’03 $21 strike to pocket an average premium of $0.44 apiece. Call sellers walk away with the full amount of premium in hand as long as shares in Pfizer settle below $21.00 at the end of the week. Call selling can be risky, particularly if sellers are naked short the call options and shares in Pfizer rally rather than retreat as the strategy predicts. Losses accumulate on the upside above an effective breakeven share price of $21.44. Meanwhile, a longer-term bearish play popped up in the April expiry. One investor purchased a 2,000-lot April $19/$22 put spread at a net premium of $1.09 per contract. The strategist may be outright bearish on Pfizer, positioning for a limited pullback in the shares over the next several months. Alternatively, the trader may be cautiously optimistic on the pharmaceuticals giant, establishing the put spread to hedge a long position in the underlying shares. Profits, or downside protection, on the spread kick in if shares in Pfizer drop 2.2% to breach the effective breakeven price of $20.91 by April expiration. Maximum potential profits of $1.91 per contract are available to the investor should shares in PFE plunge 11.2% to settle at or below $19.00.…
