If you know any healthcare stocks, you must know Pfizer (PFZ), the world largest pharmaceutical company in terms of the market cap. Pfizer has gone through quite a challenging period in the past few years due to losing patent for several huge blockbuster products, including Lipitor, the world biggest ever drug (over $12 Billion in sales). But believe or not, Pfizer is slowly bringing itself back and becoming stronger and stronger with more and more promising drugs coming to the market. You can consider Pfizer as an elite dividend paying company for your long-term investment. Buying at this level (around $30) is likely a good entry point.
Now there is potentially a stock-moving event scheduled for Pfizer. On April 6, Pfizer will have a conference call with analysts to discuss the findings of its trial of palbociclib for breast cancer. Initial results reported were very promising. Some analysts have already estimated that if approved, this drug may bring multi-billions to Pfizer annually. If the April 6 meeting provides any further evidence about its approvability, then PFZ stock price will likely respond very well upwards. If the news is disappointing, then PFZ will likely decline a few points. So what is the best strategy to play with this event? If you are already considering to buy PFZ at the current level for long term, I guess you should be happy to buy it if it drops a bit, right? So selling its put options is a fantastic way for a win-win play: you either walk away with some quick and free money (income) if the news is good, or you buy PFZ at a lower price for long-term dividend reinvestment, if the news is disappointing. This is kind of situation I’m always looking for to either boost my free monthly income or my retirement portfolio. I cannot lose either way!
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