Options Trading News

August 29, 2013  Thu 5:16 AM CT

Traders are looking to make some fast money in Pfizer now that the pharmaceutical giant has pulled back to a key support level.

optionMONSTER's Heat Seeker system detected unusual activity in the Weekly 29 calls expiring next Friday, Sept. 6, where more than 7,800 contracts were purchased. Volume was almost 12 times higher than the strike's previous open interest, indicating that new positions were initiated. Most of the large blocks fetched $0.07.

These long calls lock in the price where shares can be purchased, letting investors cheaply position for a rally. For instance, a gain of barely 3 percent by expiration would more than double the value of the contracts. (See our Education for more on the leverage of options.)

PFE rose 0.77 percent to $28.21 yesterday and has been consolidating for the last six months. It's near the bottom of that range and trying to bounce at its 200-day moving average, which could make some investors think that it's attractive at this level.

Total option volume was twice the daily average in the session, with calls outnumbering puts by a bullish 3-to-1 ratio.

(A version of this post appeared on InsideOptions Pro yesterday.)
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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