Options Trading News

July 31, 2013  Wed 2:14 AM CT

A long-term trade sees little upside for Pfizer.

optionMONSTER systems detected the sale of 23,329 January 2015 30 calls in one print for the bid price of $2.18. The volume was twice the previous open interest, clearly showing that this is a new position.

The options were likely sold against long shares in a covered-call position, given how close the strike is to the stock price, suggesting that the investor anticipates range-bound action. But the trader may actually hope to be forced to sell shares with PFE above $30, allowing him or her to get paid for exiting a long position. (See our Education section)

PFE rose 0.44 percent to $29.67 yesterday. The pharmaceutical giant was off its highs from the morning but still at its best levels since the end of April.

Total option volume in Pfizer topped 287,000 contracts yesterday, 10 times its daily average for the last month.
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The art of trading

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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