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Monday, December 11, 2023

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.

CHS – Chicos FAS, Inc. – Women’s clothing and accessories retailer, Chico’s FAS, Inc., popped up on our market scanners on Thursday morning amid heavy trading in upside call options on the stock. Shares in Chico’s are currently up 1.25% at $17.84 as of 12:10 p.m. ET.Rising call open interest on Chicos earlier this week and call buying in the name this morning suggests some traders may be bulking up bullish positions on the name. March and May $18 strike call options are most active, with around 700 lots purchased at the Mar. $18 strike for an average premium of $1.05 each, and some 3,000 of the May $18 strike calls picked up at an average premium of $1.48 apiece. On Wednesday, around 600 of the Mar. $18 strike calls appear to have been purchased for an average premium of $0.80 per contract, while roughly 2,000 of the May $18 strike call options were snapped up at a premium of $1.25 each. The value of upside calls purchased on CHS yesterday has increased substantially overnight. Traders buying the Mar. $18 strike calls this morning stand ready to profit should Chico’s shares rise another 6.8% to top $19.05 at expiration, while the May $18 strike calls make money if the stock rallies more than 9% to top $19.48 during the next four months. The retailer is scheduled to report fourth-quarter earnings on February 28th.


Caitlin Duffy
Equity Options Analyst

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