Market is down again today – at least for now – decided to go shopping. I have wanted to add a few blue chip companies to my portfolio – and Pfizer Inc (PFE) popped into my “stocks to own” screen last night.
A week after Pfizer said it would merge its division that makes older drugs with the generic drug maker Mylan, the combined value of the two companies is down by almost $28 billion. The Mylan deal, combined with an S&P downgrade, and lower earnings guidance have tanked the stock. It looks like a dog in the short term, but it is my kind of stock in the long run – for the right price.
Here is the trade:
- Sold: Ten (10) September 20, 2019 Puts
- Strike Price: $35.00
- *Premium Collected: $700.00
If I am forced to buy the 1000 shares, my entry price will be approx. $34.30 per share – over a 25% discount to Pfizer’s Fair Value of $46.00 per share – providing a comfortable Margin of Safety. Pfizer pays a 3.90% dividend – so it is another perfect candidate for my portfolio.
*Excludes transaction costs.
Leave a Reply