Yesterday, Pfizer (PFE) saw unusual options activity with the March 20 $29 put having the highest Vol/OI ratio at 210.16. The stock has struggled, down 59% since its 2021 high, making it an unattractive investment. Options offer a way to profit from the volatility.
Two other Pfizer options were also active, with volume exceeding the 30-day average. The March 20 $29 put and call underlie a Long Straddle strategy, anticipating a significant stock movement. Earnings are expected on Feb. 3, making it an interesting time for options traders.
The Long Straddle strategy involves buying both a call and a put option, expecting volatility and a significant stock move. The March 20 $29 long straddle has a net debit of $4.38, with upside and downside breakevens at $33.38 and $24.62, respectively. Options traders should consider the 71-day DTE for optimal results.
The Bull Put Spread strategy is bullish, involving selling a put option and buying a put at a lower strike price. With a net credit of $234, the maximum loss is $66. A risk-averse approach, this strategy has a higher potential return compared to the Long Straddle. Traders should be prepared for a one in three chance of success. 1. The stock market reached record highs today, with the S&P 500 hitting 4,700 for the first time. This surge was driven by strong earnings reports from tech giants like Apple and Microsoft, as well as positive economic data indicating a robust recovery.
2. In other news, a new study found that over 70% of Americans have received at least one dose of the COVID-19 vaccine. This milestone marks a significant achievement in the fight against the pandemic, with experts hopeful that widespread vaccination will help curb the spread of the virus.
3. On the political front, President Biden signed a $1 trillion infrastructure bill into law, which will allocate funding for a wide range of projects including roads, bridges, and broadband internet. The bill is expected to create millions of jobs and improve the country’s aging infrastructure.
4. Climate change took center stage as world leaders gathered for the COP26 summit in Glasgow. Discussions focused on reducing greenhouse gas emissions and limiting global warming to 1.5 degrees Celsius. Countries pledged to take more ambitious action to combat climate change and protect the planet for future generations.
Read more at Barchart: 2 Strategies Traders Are Jumping On