Weekly Calls Prescribe Further Gains In Pfizer Shares

 

Today’s tickers: PFE, NWSA & CHS

PFE - Pfizer, Inc. – Weekly options changing hands on drug maker, Pfizer, Inc., in the early going on Thursday are looking for shares to potentially extend their move to the upside next week. Shares in PFE are up 2.3% this morning, trading at a new five-year high of $27.28 ahead of the company’s fourth-quarter earnings report on Tuesday. Traders positioning for Pfizer’s shares to rally during the next six trading sessions snapped up around 500 in-the-money calls at the Feb. 01 ’13 $27 strike for an average premium of $0.29 apiece. Upside call volume is more substantial at the higher Feb. 01 ’13 $27.5 strike, where some 3,100 contracts are in play against zero open positions. Most of the $27.5 strike weekly calls appear to have been purchased for an average premium of $0.09 each, thus positioning buyers to profit at expiration next week should the price of the underlying rise another 1.1% to top the average breakeven point at $27.59.

NWSA - News Corp. – A large one-by-two ratio call spread initiated on News Corp. this morning suggests the stock may see limited, albeit substantial, gains during the next six months. Shares in New Corp., roughly flat on the session to stand at $27.38 as of 11:55 a.m. ET, have increased more than 45% since this time last year to trade near their highest level in more than a decade. The single-largest transaction in NWSA options today combines the purchase of 6,250 calls at the July $28 strike for a premium of $1.40 each, with the sale of 12,500 calls at the July $30 strike at a premium of $0.55 apiece. Net premium paid to establish the sizable spread amounts to $0.30 per contract. The bullish position makes money if shares in NWSA rally 3.4% over the current price of $27.38 to surpass the effective breakeven point at $28.30, with maximum potential profits of $1.70 per contract available should the price of the underlying rise 9.6% to settle at $30.00 at July expiration.…
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