Ok! I have been long Pfizer for some time, primarily in leaps that I have rolled from 2019 to 2020 and now 2021. I recently swapped the January 2021 30 calls into the 2021 38s, a bullish trade that has been very costly in the face of the Mylan announcement.
I have however, continue to buy Pfizer as it craters south, lowering that entry into the 38 strike calls, increasing the position this morning at $3.3 per call, with a breakeven of $41.3, at a time when the stock was $37.88.
Leaps are an extraordinary vehicle that sell off dramatically with underlying weakness, often, in my view, beyond the logical likelihood of the stocks future performance within the extended time frame.
As a word of caution, while a believer in the balance sheet and the necessity of a strong pharmaceutical industry (yes even in the face of the political environment), with a perspective on the value of the dividend and an appreciation for chart levels, my current view on Pfizer is not a sophisticated fundamental analysis of the impact of the Upjohn/Mylan combo. But I do believe that over the horizon, $41.3 is a totally achievable, indeed highly likely breakeven that justifies the investment.
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