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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: voodooist who wrote (38482)	7/29/2010 1:12:26 PM
From: E_K_S	Read Replies (2) \| Respond to of 78748

Hi voodooist: RE: Pfizer Inc. (PFE) Short-Term Option Players Optimistic About Pfizer Inc. Recently there has been some heavy volume on this stock. Perhaps earnings will not be as bad as the market expects. From the Schaefers Market Option Center:"...7/28/2010 3:04:35 PM Call volume has popped on Pfizer Inc. (PFE) today, with the pharmaceutical concern seeing 59,000 of these bullish bets traded by midday, well above the equity's expected single-session call volume of around 39,000 contracts. The September 16 call takes the title for the day's most active strike, with 16,377 contracts traded -- 60% at the ask price, suggesting they were likely purchased. With some 168,000 contracts currently open at this strike -- site of peak call open interest for the back-month series -- it's difficult to determine whether these calls were, in fact, bought to open. However, with PFE trading around $15.00, these 16-strike calls are just one point out of the money..." ------------------------------------------------------------------- PFE has been a value trap for the past decade slowly leaking oil similar to LLY. Analysts have 2010-2011 easrnings at $2.10-$2.25 and the same for 2011-2012. That makes the PE around 6.5. If PFE can stabilize earnings at current levels and show the market some prospects on how they plan to replace some of those future revenues from off patent drugs, then we may have seen the LT bottom in 2009 and retested again in June 2010 (a higher low on 30% lower weekly volume). The market seems to think so w/ 50% the normal Call volume activity for the September 16 calls. Open Interest expanded by 30% indicating some pretty large call bets that the stock will be 5% higher in 60 days. With a 4.7% dividend, that would make close to a 6.2% return in 60 days. I increased my position by 25% in June 2010 at $15.00/share. I did sell an equal amount of December 2010 $18 covered calls to "juice" my trade. I would be satisfied to peel off some shares at $18.00 in December. ================================================================ RE: Johnson & Johnson (JNJ) - Large Put volume on the October $50.00 Put. Somebody sold 1000 contracts to open, betting that JNJ will trade at $50.00/share or below in the third week of October 2010. Open Interest should expand by 30% when this trade settles indicating that it is quite substantial. It's still relatively small compared to the Open Interest for the October $62.50 calls at 3:1. Typically the Call/Put ratio is 2:1 so there is still no market conviction that the downside break down is imminent. It is building though. Disclosure: I have no position in JNJ and hold shares in PFE in both the IRA and taxable account. EKS