Drug manufacturer
Pfizer (PFE) has seen shares slide nearly 20 percent to 52-week lows in the past few months. One trader sees a longer-term rebound for shares ahead.
That’s based on the December 2025 $40 calls. With 970 days until expiration, 2,009 contracts traded compared to a prior open interest of 116, for a 17-fold rise in volume on the trade. The buyer of the calls paid $5.58 to make the bullish bet.
Shares traded just under $40, making this an at-the-money trade. If shares were to rally to their 52-week high near $55 per share, the $40 calls would be $15 in-the-money, or nearly a triple.
While Pfizer shares are trending down, shares look reasonably valued at 12 times forward earnings. The company’s pipeline of drugs remains robust, and profit margins are a healthy 31 percent.
Action to take: Long-term investors may be interested in shares in the under-$40 range. Pfizer yields nearly 4 percent at current prices, and it’s been a modest dividend growth play over time.
For traders, shares are getting oversold but haven’t flipped yet. But these long-dated, at-the-money 2025 calls have more than two and a half years to play out, and could deliver triple-digit terms in that timeframe. Even long-term investors may want to get into these long-dated options instead of shares.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.