I sold 32/34 Sep strangle for 50c before for break-evens at 31.50 & 34.50. Today's current 1SD range by Sep expiry is 32-35, highlighted orange above.
1) Ideally the stock will rally above 34, with 1 lot called away at 34 for a small 1% gain on the position and theoretical unlimited profit on the second lot.
2) It stays between the 32 & 34 strikes until expiry and collect the full $50 credit. Might not seem like much but by selling these against the stock each quarter could bring in an extra 6% annually. If you're good it can be done twice as often as that!
3) Stock drops > 3% below the put strike and I'm assigned another lot of shares at 32 which averages down my overall cost basis on the stock.
4) The entire market crashes and the stock falls to 0...
I do like the fundamentals of and am willing to make a longer term investment. CFRA gives the stock a current fair value of $33 and Trefis price estimate is $34.60.
The stock currently yields a 3.9% dividend and currently has a free cash flow yield over 6%.
The question is, what next? The IV Rank on PFE is low here at only 11% and could stay low for the next month until we approach earnings again in October.
Selling two of the 34 October call (40 delta) could bring in another 50c each.