Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Pfizer's drug pipeline for 2010 and 2011 has significantly increased

|Includes: Pfizer Inc. (PFE)
This large cap pharmaceutical has the lowest Price to earnings ratio amongst its peers in the sector.  It is severely undervalued on a risk to reward ratio as well.  A P/E of less than 9 suggests that current market value of 16.30/share is underpriced by a minimum of 3 dollars per share.  Furthermore, the company's long-term debt on its lines of credit has decreased by 230 million in the past 9 months, suggesting that management is serious about strengthening its balance sheet.
 
Moreover, the company will report late-stage trial results for 10 critical drug candidates in 2010 and 2011. Those products include bapineuzumab for Alzheimer's disease, Sutent for lung cancer, and the pneumococcal vaccine Prevnar-13.  In addition, the company's $68 billion purchase of Wyeth is scheduled to close by year-end. 
 
In examining the 6-month chart, shares have rallied from a support level of 15.05/share on heavy volume.  In July 10 through July 13 2009, the daily volume exceeded the average by 20% suggesting tremendous interest.  As a result, the 15.75/share resistance has been breached with authority.  This has added confidence in institutional clients, evident by the large blocks of shares they bought in August of 2009. 
 
Currently, shares are trading above the 200 day moving average at 16.30/share... I recommend the following:
Buy shares at 16.30, and simultaneously write (sell to open) Oct strike 16 call options.  The call options are paying a premium of .68/call.  Each call represents 100 shares.  This means that on a 1000 share investment in PFE (16300), you'll make 380.00 in October (16.30 minus .68).  This presents a return of 2.33% for the month of October.

Disclaimer:  MD Capital Management does not own PFE