PFE is a money machine at $207Bn ($37) with $19Bn in profits (was $30Bn during Covid) which makes us not worried about there $15Bn in debt (was $42Bn pre-covid). They also spit out a nice $1.64 (4.5%) dividend while you wait so, for the Income Portfolio let’s:
- Buy 1,000 shares of PFE for $37.12 ($37,120)
- Sell 10 PFE Dec 2025 $37.50 puts for $5.25 ($5,250)
- Sell 10 PFE Dec 2025 $37.50 calls for $5 ($5,000)
That’s net $26,870 on the $37,500 spread so we have $10,630 (39.5%) of upside if PFE is flat or up plus we have 30 months so call it 10 dividends of $410 is another $4,100 (15.2%) and, once PFE is back around $40, we can sell a few short-term calls for income as well. For EXAMPLE, the Sept $37.50 calls are $1 so selling 5 of those would bring in $500 using just 56 of our 882 days. Do that 10 times and that’s another $5,000 coming in.
It is also shameful not to have PFE in the LTP so let’s:
- Sell 20 PFE Dec 2025 $37.50 puts for $5.25 ($10,500)
- Buy 50 PFE Dec 2025 $35 calls for $6 ($30,000)
- Sell 40 PFE Dec 2025 $45 calls for $2.25 ($9,000)
That’s net $10,500 on the $50,000 spread so we have $39,500 (376%) upside potential if PFE can get back to $45. Meanwhile, we can sell 10-20 short calls for 882 days and the Sept $37.50s (55 days) are $1 so we can pick up $1,000 more than 10 times and that will give us a net $0 spread with an obligation to own 2,000 shares PFE for net $37.50 – I have no problem with that!
This play is essentially what we put in the Butterfly Portfolio back on May 19th – it’s just nice to have the opportunity to get in again at a good price.
