PFE Put-23 Jan 07

The stock was trading around a price of $26.29 on 23 jan 07. The chart above is a daily chart of the Pfizer Inc. [PFE]. The stock is rated as an average stock because it is fairly valued compare to its industry, its sector and the S&P 500. This trade was made mid-day on Tuesday. The trader selected the stock because overall it is in a downtrend, trending lower since its high set back in September. As the trader has mention, the stock does have wild price swings to it but it does have a very strong resistance level above. It just reported unfavorable earnings and so the trader believes that prices will yield to weakness and fall lower towards support near the $23.25. Of course, once this happens the Put option will increase in value.

Buy a June 25 put at 0.60