Cabot Options Institute Income Trader – Alert (PFE)
There is almost no premium left in our PFE December 16, 2022, 45 puts. As a result, I want to buy back the 45 puts and sell more premium in January.
Pfizer (PFE)
IV: 32.5%
IV Rank: 23.3
Expected Move (Range): The expected move (range) for the January 13, 2023, expiration cycle is from 48 to 54.
With PFE trading for 51.60, I want to sell puts going out 36 days.
The Trade
Buy to close PFE December 16, 2022, 45 put strike for a total of $0.02 (As always, the price of spread will vary, please adjust accordingly.)
Once that occurs (or if you are new to the trade):
Sell to open PFE January 13, 2023, 49 put strike for a total of $0.62 or higher (As always, the price of spread will vary, please adjust accordingly.)
Delta of spread: -0.24
Probability of Profit: 72.94%
Probability of Touch: 53.14%
Total net credit: $0.62
Max return (cash-secured): 1.3%
Risk Management
If PFE closes below 49 on expiration we will be issued shares at the 49 strike and begin the process of selling calls against it. Until that point, we will continue to sell puts on PFE. Of course, any necessary trade alerts/updates will follow.
If you have any questions, please do not hesitate to email me at andy@cabotwealth.com.