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Pfizer Inc. Message Board

  • johnparcg johnparcg Sep 19, 2013 5:03 PM Flag

    and so my options finally expire....

    friday on this most boring stock of all time. thanks for the non-memories, over several months this dog could not even rise $2 to make me money. Unless this company cures cancer by friday, i learned my trading options on a whim the hard way. I will NEVER trade this stock again, keep your dividend.

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    • Outsized returns can be made on even the most boring of stocks like Pfizer IF you utilize superior options strategies and you do it specifically at TD Ameritrade which is the only brokerage in the land to have margin on naked puts at floor levels.

      For Pfizer for example, there are 22-strike puts out to Jan. 2015 that are currently quoted at $81 bid, $85 asked per contract. An investor selling a naked put contract at Ameritrade would receive $80.20 up-front after commissions for every $305 invested. If the stock simply remained above the $22 strike price over the next sixteen months, the nominal return for that holding period would be 26.3% which is almost 20% annualized. That is the LEAST you could earn if the stock remains above 422. But in all likelihood, your annualized return would be a bit more than that. If in a year from now PFE is still a $29 stock, you would be able to buy back the options that you sold for $81 for about $9. Your return in that case after commissions would be $70.40 per contract for every $305 invested and in that case, your 12-month (long-term gain) return would be 23.1%. If PFE was a little higher than $29 a year from now, you'd be able to buy back the option even cheaper and that would mean a still higher return.

      All brokerages other than Ameritrade have higher margin requirements on naked puts and that of course decreases the return.

      If the investment is held the full 16 months, in order to match the 26.3% nominal return, this $29 stock would need to be above $35.30 and that certainly isn't a given.

      Selling deep out-of-the-money naked puts and doing so specifically at TD Ameritrade is far and away the best chance for the average investor of earning outsized returns and doing so with relative safety. be advised that this strategy does NOT work in crashing markets but it will work well in flat markets, market corrections and even bear markets as long as they are not overly severe.

    • wwhy would anyone trade a large cap div stock ... they just don't move all that much , except for brief periods
      when they tend to make large moves ... the smaller pharmas , that don't pay divs, will get huge moves
      both up and down , based on headlines ... if you want to gamble , there should be a casino nearby ... g

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