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Pfizer Offers Investors An 18% To 100% Return

Apr. 05, 2021 11:04 PM ETPfizer Inc. (PFE)112 Comments
Walter Zelezniak Jr profile picture
Walter Zelezniak Jr


  • Pfizer is trending higher.
  • Price action suggests a potential of $43.
  • Investors can make 18% owning the shares or 100% by buying a long-term call option.

Pfizer’s (NYSE:PFE) chart looks like it will get to $43 per share. Investors or traders can take advantage of this setup and potentially maximize the opportunity using options to make as much as 100% return on your investment using long-term options that expire in January 2023. Let’s first review the price action. Then I will detail two ways to take advantage of the opportunity along with the risks and challenges that come with the opportunity.

Chart 1 – PFE Weekly Chart with 10 and 40-Week Moving Averages

Chart 1 shows some interesting developments for PFE. This is a weekly chart showing price along with the 10-week moving average in blue and the longer term 40-week moving average in red. Looking at Chart 1 above you can see that PFE hit a low in March 2020 at $25. It then rallied up to just over $34 in May 2020. Also notice that the 10-month moving average crossed above the 40-week moving average in May.

I consider that to be a bullish development and a bullish trading signal. However it didn’t work that time. Price couldn’t hold that $35 level and PFE fell back to $29 in June 2020. When this happened the moving averages crossed again this time is a bearish manner. The 10-week moving average crossed below the 40-week moving average and I consider this to be a bearish development and a bearish trading signal. The pullback to $29 in June did offer one bullish development. The price drop to $29 is a higher low.

In other words investors weren’t willing to let PFE retest its March 2020 low. Now things get better for PFE investors. PFE rallies to $36 in August 2020 making a higher high. Investors were able to push PFE up above the May 2020 high and that is bullish. Also bullish

This article was written by

Walter Zelezniak Jr profile picture
As an individual investor nearing retirement I am trying to build my financial assets in order to have a fulfilling retirement. I am interested in trading both long and short; or at least using inverse ETFs, to take advantage of market declines. Having long term and short term trading strategies, proper execution of my trading plan, and absolute investing results are my goals. I see my articles as a way to keep me focused on developing winning trades. I also expect to learn much from the feedback that is provided in the comments section.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in PFE over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I own the PFE January 2023 35 Call

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (112)

Pfizer appears to be a good investment and pays a good dividend.
Walter Zelezniak Jr profile picture
PFE closed today at $43.45. I more than doubled my money on my option.
@Walter Zelezniak Jr You can thank all those people who bought stock just in time to qualify for the dividend tomorrow. I hope you closed out your option and locked in those gains.
Walter Zelezniak Jr profile picture
@Make good choices Good morning. I did close out my position and locked in those gaines.
Michael1944 profile picture
@Walter Zelezniak Jr
and now you have sold a solid dividends payer with potential,you buy what??
I just collect the Rent, I keep the building.
POW is a good alternative.
Power Financial.
PFE started off today with a bang and up over 2% at one point only to end with a gain of 0.05%. Seems they can't remain above the $40 point. My biggest gainers were ADM, BEN, CIM, CVS, AND KR. Portfolio closed up 0.96%. All in all a very good day.
Walter Zelezniak Jr profile picture
@Aristocrat & Dividend King Investor Looks good to me. There is nothing wrong with a very good day.
Good call (pun intended)--
At around the time this article posted I bought several $37 calls (expiring 1/21/22 @ 1.65)
Up 132% to date. I intend to bail when PFE starts touching $40+

Tempted to bail around PFE $42 but don't want to get too greedy.
Walter Zelezniak Jr profile picture
@khansfman09 Great job! Thanks for updating me on your position. Good luck.
@Walter Zelezniak Jr - thanks again/ exited @ 4.6 this am- PFE is down after hours as Biden is considering waiving patents on vaccines so feel like it was the right move. If it sinks below $38 I will nibble again-- maybe sell $36 puts- we'll see.
I prefer 100%.
Pfizer is so huge. Remember Pfizer bought out Warner Lambert and than Upjohn and Pharmacia merged and Pfizer bought Upjohn. Who knows if Pfizer did not do enough cost cutting. It is a stable investment and if you drops in price always buy more. The old American manufacturer had a drug division that gave rise to Bristol Myers Squibb. Now Olin is really small and not a big company or one that is profitable. Strange, how old companies or parts of them gave rise to giant profitable companies.
I have been wandering what is keeping phizer back given that phizer is one of the top vaccines we have and are doing further vaccine testing. I just don't get it.
@Xandi You know American capitalism rewards the board members with big bonuses. For one stop this. Pfizer might have to spin off other divisions. The Viatris -Mylan combo may have been a mistake due to drastic competition among international generic pharmaceutical companies and the greed in Mylan that occurred over decades. Pfizer is a good company but the shareholders have to learn to control corporate greed.
@Xandi Hold Pfizer, good core holding.
Here2Learn&Earn profile picture
Nice play on call, but when stalls, can sell weeklies (out a few weeks if no premium) against it to reduce cost basis and if really bullish, sell some monthly puts around the 20 delta to further reduce basis and if your really lucky, you will have the call for free in not time then just hold on for the ride.
Today's Pfizer is a combination of Upjohn, Pharmacia and Pfizer of old. It is a huge pharmaceutical company. I really do not understand what the spin off of Viatris which is a combo of Upjohn's generics and Mylan of old will do for Pfizer shareholders. It appears like a low risk stock. I held Pfizer for 20 years and do not touch the holdings.
18 to 100% upside... shouldn't it be closer to 50-75% to 100. 18 does not give much hope.
Now they are saying 3 shots of the Covid vaccine might be effective against the South African variant.

How will that help the stock price.
@AbolishtheFed "How will that help the stock price."
A third shot means a 50% increase in sales, right?
@Make good choices Yes. And the stock price will go up 18 cents.Woo Woo. :) :)
@Make good choices I would think so. They might be able to parlay this Covid mania into another flu shot situation that every year they get a steady stream of people to get something they don’t need (although many do) for a booster or to include new strains.
I have to admit Friday's increase was nice. Now only $0.75 in the red as far as stock price, but ahead when dividends are counted. My investment company indicates my portfolio which I started on 4/15/2020 is now up 48.35%. Reason why I love Dividend Investing.
Michael1944 profile picture
I have met several of the Pfizer Presidents,may be long on brains but short on personality,and it often seemed as if people were promoted y people above them who could not challenge them for their job?
People manage their careers,not their jobs.
Optimistic article. Hard for me to believe with PFE always moving forward one step and then two steps back. We shall see if you are right.
Michael1944 profile picture
Pfizer is a bloated,inefficient organization with over paid management,many of whom are useless.
I spent a few years as part of Pfizer,was not impressed,lacks dynamism,like the Federal Government.
@Michael1944 Sounds right, they do have a knack for making some good profitable acquisitions, but something is not working in the right direction for this potential international pharmaceutical giant. They have a decent pipeline. I would say buy it and hold it. But the author is dreaming in his optimism.
@Michael1944 Are not they all ?
Allivest Capital Management, LLC profile picture
1. Sell all $PFE stocks
2. Buy equal contracts Leap call 2023
3. Sell deep in the money Leap put 2023. to save some theta
4. Worse case, you own the stock again (!) in 2 years.
5. Use the proceed to invest somewhere else
"1. Sell all $PFE stocks
2. Buy equal contracts Leap call 2023
3. Sell deep in the money Leap put 2023. to save some theta"

Have you heard of a Poor Man's Covered Call? You are half way there.

1) Buy deep in the money LEAPS calls (with a delta =>.80) The extrinsic value portion of the premium costs pocket change a day.
When the LEAPS only has 90 days left until expiration, roll it out to another year or more. I chose 90 days because the last 90 days has the greatest rate of time decay. You don't have to let it expire and own the stock if you don't want to.

2) SELL weekly out of the money covered calls (with a delta <=.30)
The weekly income lowers the cost basis of the LEAPS.
IF the covered call is in the money on expiration day, don't let it expire, roll it to an otm strike, with a further out expiration to earn a net credit.

3) The LEAPS acts like a synthetic shares of stock. Brokers allow you to sell covered calls against it.

4) You earn money in two ways with a PMCC.
a) Selling weekly covered calls against the LEAPS, earns weekly income.
b) As the underlying stock rises in value, so does the LEAPS. You can roll it at 90 days, to continue the growth. OR you can sell it for a tidy profit.

5) The PMCC reduces the risk from bankruptcy. If you own the stock and it goes bankrupt, you lose the full value of the stock. With a PMCC you choose the amount you are willing to risk, which is usually less than half the amount of owning the stock.
Knowledge IS power, only IF you apply that knowledge.
Kashif Azam Bachani, CFA profile picture
@Make good choices I learned something new today because of you. Many thanks for sharing your knowledge!
@Sixsmith12 Thanks for the acknowledgement. I smile every time someone posts to tell me this. It is what motivates me to do it.
I share, to pay it forward (and for the pat on the back), because many people shared their knowledge with me. That is why I often sign off with...
Knowledge IS power, only IF you apply that knowledge.
TAS profile picture
18-100%. Now, that spread inspires confidence in the research.
Walter Zelezniak Jr profile picture
@TAS Thanks for reading my article. The reason for the spread is not due to the analysis. It is due to the way you take advantage of the opportunity, buying shares outright or buying the option. I'm sorry you didn't grasp that from reading the article.
bkkdude profile picture
@TAS buyer long Options 😭 usually lose, hence the 💯% potential.
@bkkdude With short term expirations dates, that is true.
MOST buyers of options make the costly mistake of not choosing a MUCH further out expiration than they think they will need. They run out of time and money, before the underlying stock moves up.

Check out a few free videos on YouTube that explain the Poor Man's Covered Call. Basically, you get paid weekly premium, to own a 1 year, deep in the money call option. This weekly premium lowers the cost basis of the LEAPS call that you bought. In the mean time, the LEAPS call rises in value, as the underlying stock rises in value.
You still need to pick a growing stock to be profitable, but how is that different from buying and holding a growing stock.
Brus profile picture
06 Apr. 2021
sold this looser at 42 premarket on Pfizer Monday never looked back
I hear a lot of unflattering comments about Pfizer here. Let me say that I own 2050 shares of PFE bought at different times over last 21 years. I have an average cost of $16.00 paying me 9.75% (yearly dividends of $4000.00 ) Where will I find a company
with such strength and staying power as pfe. In my portfolios I have a half dozen equities with like returns accumulated over many years. I think people are in too much of a rush to accumulate assets and are willing to abandon fine steady growers such as PFE. Buying good quality equities at times when P/Es are toward the low side and paying a decent dividend (relative to the CPI) with healthy cash flows will get you where you want to go. Slow and steady with compounding as an ally ,but most of all PATIENCE.
Petrichor78 profile picture
@Adbull Pfizer closed today at same price as in 1999. I can think of 100s of better investments.
@Petrichor78 keep in mind the dividend by not selling for 21 years + adbull never lost anything with it. I think Pfizer is a very safe and lucrative way to invest your money. It won't double or anything but it also won't break down. after selling the pfizer vaccine to the world, this company is highly undervalued at the moment!
@Petrichor78 In that case 4 or 5 will do you fine. No need for questions when you already have the answers
Good Article
Am bookmarking
Thank You
Walter Zelezniak Jr profile picture
@bearcub1936 Thank you for reading and making a nice comment.
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