Pfizer (PFE) 3/17/10 PriceWatch Alert Targets 11.00% Return

Posted: Wednesday, March 17, 2010 8:16 AM EDT
By: Market Intelligence Center Staff

Pfizer (NYSE: PFE) closed yesterday at $17.26. So far the stock has hit a 52-week low of $12.75 and 52-week high of $20.36. Pfizer stock has been showing support around 16.98 and resistance in the 17.52 range. Technical indicators for the stock are Bearish and S&P gives PFE a positive 4 STAR (out of 5) buy rating. PFE appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '11 17.50 covered call for a net debit in the $16.00 area. That is also the break even stock price for this trade. This covered call has a 311 day duration, provides 7.30% downside protection and a 9.38% assigned return rate for an 11.00% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the PFE Jan '11 15 Call and selling the Jan '11 17.50 call for a $1.55 debit. The trade has a 311 day life and would provide 4.11% downside protection and a 61.29% assigned return rate for a 72.00% annualized return rate (for comparison purposes only). Pfizer has a current annual dividend yield of 4.22%. [WBA-Seven Summits Research]