I am recommending we roll our Pfizer (PFE) put out one week and down one strike to generate more income.
As I said in this week’s OIB Market Update, I intend to trade PFE for weeks or even months. Today’s roll puts our expiration after the company’s expected earnings date of July 28.
If you are uncomfortable holding a position through the earnings announcement, you may want to close the current position now and re-enter the trade after the company has reported.
I am also recommending we book fast profits on Sunrun (RUN) given the big pop in shares today.
PFE Jul Week Four (7/23) 40 Put
Current Stock Price: $40.79
Cash in Hand: $0.67
- Buy to close the PFE Jul Week Four (7/23) 40 Put for around $0.06
- Sell to open the PFE Jul Week Five (7/30) 39.50 Put for around $0.36
- Set your initial credit limit at $0.30, but adjust as needed to roll today
New Cash in Hand $0.97
Expiration: After the close on Friday, July 30
Potential Rate of Return: 2.5% in 18 days, or 50% annualized, if this option expires worthless
RUN Aug Monthly (8/20) 40 Put
Current Stock Price: $52.74
Cash in Hand: $1.15
Action: Buy to close the RUN Aug Monthly (8/20) 40 Put
Current Option Price: $0.60-$0.65
Recommended Limit: Set your initial limit order at $0.63, but adjust as needed to close today
Profit: $0.52, or $52 per contract
Potential Rate of Return: 1.3% in two days, or 237% on an annualized basis