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Pfizer Inc. (NYSE:PFE) calls outstripped puts by a greater than 4-to-1 margin yesterday. Short-term contracts were in vogue, as well, per the stock's 30-day at-the-money implied volatility, which popped 3.7% to 13.3%. In fact, four of the five most active PFE strikes are set to expire within the next month.
Occupying the top spot was the weekly 9/26 29.50-strike call, where roughly 4,000 contracts were exchanged. The majority traded at or near the ask price -- for a volume-weighted average price (VWAP) of $0.41 -- plus open interest soared overnight, collectively pointing to buy-to-open activity at the near-the-money strike.
In sum, the buyers expect PFE to finish above $29.91 (strike plus VWAP) at the close on Friday, Sept. 26, when the weekly series expires. From the stock's perch at $29.44, this would require a 1.6% upside move, with potentially unlimited gains beyond the breakeven mark. Conversely, potential downside is capped at the initial premium paid, should the option expire out of the money.
Looking at the charts, the $29.50 level -- which corresponds with Pfizer Inc.'s (NYSE:PFE) 50-day moving average -- has recently served as a layer of resistance for the shares. As such, despite the strike being just 6 cents from the current stock price, delta on the call is just 0.48 -- signifying a less than 1-in-2 chance of an in-the-money finish.