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Saturday, May 25, 2024

Pfizer Calls Look For Shares To Extend Rally


Today’s tickers: PFE, DFS & TSL

PFE – Pfizer, Inc. – Shares in the world’s largest drug maker are up sharply on Tuesday, trading 3% higher on the session at $27.65 as of 11:10 a.m. ET, the highest level in more than five years. Pfizer’s shares are rallying after the company posted better-than-expected fourth-quarter earnings ahead of the opening bell and forecast2013 earnings above analyst estimates. The stock has gained more than 17.5% since mid-November. Heavy trading traffic in Pfizer call options this morning suggests traders are positioning for shares in the name to extend gains during the next couple of months. February expiry calls are changing hands at a clip, with notable volume exceeding open interest at the Feb. $28 strike price. Most of the Feb. $28 calls in play appear to have been purchased for an average premium of $0.08 each. Meanwhile, the single-largest print in PFE call options, a block of 24,500 contracts, traded at the Mar. $28 striking price. It looks like one strategist purchased the call options at a premium of $0.17 each during the first 20 minutes of the trading day. Overall call volume at the Mar. $28 strike exceeds 28,500 contracts as of 11:30 a.m. ET, trumping open interest of 9,870 contracts. Traders long the upside calls stand ready to profit at March expiration should Pfizer’s shares increase another 2.0% to surpass the breakeven point at $28.17.

DFS – Discover Financial Services, Inc. – Bearish options on credit card issuer and electronic payment services provider, Discover Financial Services, are active this morning with shares in the name trading 0.5% lower on the session at $37.87 as of 11:35 a.m. ET. March expiry put options are the most actively traded contracts on Discover today, with upwards of 9,400 lots in play at the $37 strike versus open interest of just 33 contracts. It looks like one or more traders purchased the bulk of the volume for an average premium of $0.91 each. Put buyers may profit at expiration in six weeks in the event that shares in DFS slump nearly 5.0% from the current level to breach the average breakeven point at $36.09. Discover is scheduled to report fourth-quarter earnings after March options expiration has passed.

TSL – Trina Solar Ltd. – A burst of upside call buying on the Chinese solar-power products manufacturer this morning suggests one or more traders are positioning for shares in Trina Solar Ltd. to rally during the next couple of weeks. Shares in TSL are up more than 3% to stand at $5.07 as of 10:35 a.m. ET. The stock briefly traded in negative territory near the open, but moved higher during the first hour of the session on Tuesday. Bullish trading in Trina Solar options is heaviest at the Feb. $5.0 strike, where upwards of 10,500 calls have changed hands versus open interest of 1,376 contracts. Most of the calls were purchased during the first 15 minutes of the trading day for an average premium of $0.31 apiece. Intraday gains in the price of the underlying shares has lifted premium required to purchase the $5.0 strike calls by nearly 40% to $0.43 apiece this morning.


Caitlin Duffy
Equity Options Analyst

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