It’s time to move on from our Pfizer (PFE) position.
We will be booking a large loss and did not make this decision lightly. However, there is very little good news in the stock as it relates to selling options for income.
PFE continues to make new lows as the accelerated revenue benefit the company received in 2022 from mRNA vaccines disappears. This has prompted many Wall Street analysts to issue downgrades on the shares.
Meanwhile, PFE’s Implied Volatility Rank has dropped from the 40s down to 20. This limits the premium we can collect at multiple out-of-the-money strikes and makes it harder to generate a reasonable income stream over time.
Finally, the position is taking up capital that can be better deployed in other stocks/ETFs that generate a higher cash rate of return.
If you still own shares of PFE stock, you have two choices.
- You can continue to hold the shares for the long term. Pfizer is still a valuable drug company and isn’t going away. The stock may recover its mojo one day and start to trade higher. If you want to stay invested in the stock for the long term, monitor the position from time to time but don’t try to sell calls on the stock until there is a verified strong upward trend.
- Sell the shares and reinvest the capital in other income-producing trades that we are recommending in Options Income.
There are potential pharma companies that could be good candidates for selling options, but PFE is not one of them at this time. So, we are moving on from the position.
Current Stock Price: $36.76
Action: Sell shares
Loss: $19.58, or $1,958 per 100 shares