CSP on PFE

Given MRNA ER miss today, I'm looking back at PFE for a long-term hold given a 6.5% dividend.  PFE is near its 52-week low, and currently the Apr 17 25 PUTS have an IV of 22%.

Based on historical data analysis, PFE typically maintains an implied volatility in the mid to high 20s range, with:

• Average IV around 27-28%
• Recent range of roughly 25-30%

This is relatively moderate IV for a large pharmaceutical company, reflecting PFE's status as an established blue-chip stock while accounting for some sector-specific volatility from drug trial results and regulatory decisions.

Compared to other pharmaceutical companies, this is on the lower end, as smaller biotech companies often trade with IVs of 50%+ due to their more binary outcome nature (drug success/failure).

If you're considering selling puts on PFE, this IV level suggests moderate premium income - not as high as more volatile stocks but typically enough to generate meaningful premium while having lower risk of large adverse moves.

Based on the available information, there are several potential catalyst events that may impact Pfizer's (PFE) stock price over the next 60 days:

1. Announcement of New Chief Scientific Officer: Pfizer is nearing completion of its search for a new CSO, with an announcement expected soon. This leadership change could influence investor sentiment.

2. Earnings Announcement: Pfizer has an earnings announcement scheduled for April 29, 2025. This event typically impacts stock prices as investors react to the company's financial performance and future outlook.

3. Dividend Payment: Pfizer is expected to pay a dividend of $0.430 per share on March 7, 2025. While this is a regular event, it may still affect short-term trading patterns.

4. GLP-1 Program Updates: Any news regarding Pfizer's once-daily formulation of danuglipron (oral GLP-1) could impact the stock price, as investors are closely watching developments in this area3.

It's important to note that the stock's performance may also be influenced by broader market trends, industry developments, and unforeseen events not mentioned in the search results.

Lyft

After strong ER last night I’m going long on Lyft this morning with 2026 15 calls.  Boa maintains but at 17 target.  Buyback is a good thing.

CRSP Earnings Beat

CRISPR Therapeutics (CRSP) reported impressive Q4 2024 earnings today, beating analyst estimates. The company posted earnings of -$0.44 per share, surpassing the consensus estimate of -$1.15 by $0.71. This significant beat demonstrates the company's strong financial performance and operational efficiency.

Key highlights from the earnings report include:

• Revenue of $35.7 million for Q4 2024
• R&D expenses decreased to $82.2 million from $95.1 million in Q4 2023
• Strong cash position with $1.9 billion in cash and equivalents as of December 31, 2024

The company's CASGEVY® treatment continues to gain momentum, with over 50 authorized treatment centers activated globally and more than 50 patients having cells collected across all regions by the end of 2024.CRISPR Therapeutics is poised for a catalyst-rich 2025, with several key updates expected across its pipeline, including:

• Updates on lead in vivo cardiovascular programs in the first half of 2025
• A broad update on CTX112 in oncology and autoimmune diseases in mid-2025
• Ongoing clinical trials for next-generation CAR T products CTX112™ and CTX131™
• Progress on in vivo gene editing candidates CTX310™ and CTX320™

Despite the earnings beat, CRISPR Therapeutics traded up only slightly, reaching $39.62 on Tuesday and broke 40 in after-hours trading.

Nuclear Power was My Trade of the Month

Too bad I didn’t take my own advice…. I’ll craft a post on the energy need for AI and Cryptocurrency mining, let alone the rest of us who still like power running to our homes.  These companies are a bit off from certification to run a small nuclear power plant in your local neighborhood but the big companies in AI are already funding some of them.  

On the Amazon earnings call power was a significant mention for growth.  All those data centers and the compute power needed to churn on all that data...

Oklo and the entire Nuclear Power Watchlist, but Oklo specifically doubled from when I mentioned it last month.

         

How to Recover From a Bad Trade (Yes, My MRNA 36.50 PUTS will be assigned)

Fortunately, I did close my 35.50's for a good gain which already offsets the unrealized-loss I'll have in MRNA come Monday morning.  MRNA still has good volatility so I will be selling covered calls Monday as well, or maybe wait for a brief bounce to capture more premium.  MRNA has weekly calls so I should recover quickly.  

However, there are some significant catalysts that could prove to be strong headwinds.  States trying to legislate against mRNA vaccines, Earning on the 14th and the RFK Jr confirmation.  In the end this will probably be a net-0 or slight loss but proves as good reminder to look at the bigger picture and the macro environment.  Yes, one of my rules, but sometimes I get G-Locked as well.

Recovering from a significant trading loss can be a daunting challenge, but options strategies, particularly covered calls, offer a potential path to recoup losses and rebuild your portfolio. Let us explore how this approach can help traders bounce back from setbacks.

Understanding Covered Calls

A covered call is an options strategy where an investor owns shares of a stock and sells call options against those shares1. This approach can generate income through option premiums while potentially reducing the overall risk of the position. Here is how it works:

1. You own 100 shares of stock.
2. You sell a call option on those shares, giving the buyer the right to purchase your shares at a specific price (strike price) before a certain date (expiration)
3. You collect a premium for selling this option.

Using Covered Calls to Recover Losses

When you've experienced a loss in a stock position, covered calls can be an effective recovery strategy:

1. Generate Income: By selling call options against your existing shares, you can collect premiums that offset some of your losses3.
2. Lower Your Break-Even Point: The premiums you receive effectively reduce your cost basis in the stock, lowering the price at which you break even6.
3. Limit Further Downside: While covered calls don't protect against all downside risk, the premium received does provide a small buffer against further losses1.

Implementing the Strategy

To use covered calls for recovery:

1. Analyze Your Position: Determine the magnitude of your unrealized loss. For example, if you bought a stock at $40 and it's now at $30, your paper loss is $10 per share6.
2. Choose Your Strike Price: Select a strike price that balances potential upside with premium income. A common approach is to choose a strike price above the current stock price by half of your loss6.
3. Select an Expiration Date: Longer-dated options typically offer higher premiums but limit your flexibility. Choose an expiration that aligns with your recovery timeline.
4. Execute the Trade: Sell one call option contract for every 100 shares you own.

Example Scenario

Let's say you bought 100 shares of XYZ stock at $50, but it's now trading at $40. Your unrealized loss is $1,000. You could:

1. Sell a covered call with a $45 strike price (halfway between your purchase price and current price)
2. Collect a premium of, say, $2 per share ($200 total)
3. If the stock rises above $45 by expiration, your shares will be called away, but you'll have recovered $700 from your loss ($500 from stock appreciation + $200 from the premium)
4. If the stock remains below $45, you keep the $200 premium, reducing your effective loss to $800.

Risks and Considerations

While covered calls can aid in recovery, they are not without risks:

• Capped Upside: If the stock price surges above your strike price, your gains are limited3.
• Continued Downside Risk: You are still exposed to potential further declines in the stock price.
• Assignment Risk: The option buyer may exercise their right to purchase your shares at any time before expiration.

Conclusion

Covered calls offer a strategic approach to recovering from trading losses. By generating income and potentially lowering your break-even point, this options strategy can help you rebuild your portfolio more efficiently than simply holding and hoping for a recovery. However, it's crucial to understand the mechanics and risks involved before implementing this or any options strategy. Remember, successful trading isn't about avoiding all losses, it's about managing risk and having strategies to recover when setbacks occur. As you navigate the path to recovery, consider keeping a detailed trade log to learn from your experiences and refine your approach over time.

Some Thoughts About Integrated Shipping Services (ZIM)

ZIM Integrated Shipping Services (NYSE: ZIM) has been a focal point for investors interested in the shipping industry. As of February 5, 2025, the stock presents a complex picture for traders and long-term investors alike.

Analyst Sentiment and Price Targets

The consensus among analysts leans bearish on ZIM's prospects. Out of 5 analysts covering the stock, the average rating is "Sell “This pessimistic outlook is reflected in the average 12-month price target of $14.79, representing a potential 18.38% downside from the current price of $18.12.

Breaking down the analyst’s recommendations:

- 2 analysts rate ZIM as a "Hold"

- 2 analysts rate it as a "Sell.”

- 1 analyst gives it a "Strong Sell" rating

It is worth noting that analyst sentiment has deteriorated over the past six months, with no "Strong Buy" or "Buy" ratings since October 2024.

Dividend Considerations

One of ZIM's most attractive features for income-focused investors has been its high dividend yield. Historically, the company has offered a substantial dividend, with a reported yield of 33.27% annually. However, investors should approach this high yield with caution, as shipping industry dividends can be volatile and dependent on cyclical factors.

Options Strategies

Given the bearish analyst sentiment and the stock's high volatility (implied volatility of 67.14 as of the last report), options traders have several strategies to consider:

1. Covered Calls: For investors holding ZIM shares, selling covered calls can be a way to generate additional income. This strategy can help offset potential downside risk while capitalizing on the stock's high implied volatility.

2. Cash-Secured Puts: Traders bullish on ZIM but wary of immediate entry might consider selling cash-secured puts. This strategy allows for potential stock acquisition at a discount while generating premium income.

3. Put-Call-Put (PCP) or Wheel Strategy: More advanced traders might employ a PCP strategy, which involves cycling between selling puts and covered calls to maximize premium collection while managing stock ownership.

 Risk Considerations

ZIM's stock has shown significant volatility, with price targets ranging from a low of $9.25 to a high of $22. This wide range underscores the uncertainty in the shipping sector and the company's future performance.

Investors should be mindful of several factors:

- Global trade fluctuations affecting shipping demand

- Fuel cost volatility impacting profit margins

- Potential changes in trade policies and tariffs

- The cyclical nature of the shipping industry

Conclusion

While ZIM's high dividend yield may be tempting, the bearish sentiment and downside price targets suggest caution. Options strategies like covered calls or cash-secured puts might offer ways to engage with the stock while managing risk. As always, thorough due diligence and consideration of one's risk tolerance are essential before making any investment decisions in this volatile sector.

Catalyst and Trading

If you look at Moderna (MRNA) today, you'll see a significant drop.  While I was aware of the Senate Confirmation today, especially with the chatter on StockTwits, I didn't think of the impact if the outcome was looking positive.  This also affected Pfizer which reported very well this morning making way for a early-morning scalp, however my PUTS are not where I was planning.  I'm ok with holding MRNA if it does get put to me Friday as I'm still above break-even on the 35.50s given the premium I sold them for.  I'm good because they have weekly options and good volatility to sell covered calls quick enough to recoup losses if MRNA does not recover.  I did sell my 35.50s on the morning upswing for a fairly decent profit.

That said, I wanted to highlight how catalysts can impact trading strategies...

Navigating market dynamics requires vigilant attention to catalysts that can sway trade strategies. Recent developments across earnings, macro events, and geopolitical shifts highlight critical areas for traders to monitor.  

Earnings Momentum and Sector Divergence

Q4 2024 earnings season has revealed stark contrasts:  

- Estée Lauder reported a 6% net sales decline to $4.0 billion, with adjusted EPS dropping 29% year-over-year to $0.62, driven by restructuring costs and soft demand.  

- Apple posted record revenue of $124.3 billion (up 4% YoY), buoyed by services growth and Apple Intelligence adoption, showcasing resilience in tech.  

With 77% of S&P 500 companies exceeding expectations thus far, traders should track sector-specific trends, particularly in tech, consumer goods, and industries exposed to discretionary spending.  

Macro Risks: Tariffs and Economic Data

- Trade Policy Uncertainty dominates sentiment:  

- Delayed Tariffs: The U.S. postponed 25% tariffs on Mexico/Canada for 30 days after border security concessions but imposed 10% tariffs on all Chinese imports, triggering retaliatory measures.  

- Economic Impact: Analysts warn Trump’s proposed 60% China tariffs could reduce U.S. GDP by 1.3% and elevate inflation, creating stagflationary risks.  

Key Upcoming Data:  

- U.S. Jobs Report (Feb 7): Non-farm payrolls and unemployment figures will shape Fed rate expectations.  

- Eurozone CPI: Inflation trends could influence ECB policy amid weak manufacturing data.  

Geopolitics and Sectoral Shifts  

- AI Infrastructure: Massive investments in AI chips and models are accelerating adoption, with companies like Apple integrating AI into consumer products.  

- Rebuilding Themes: Infrastructure, energy, and homebuilding sectors may benefit from post-election policy tailwinds.  

Strategic Considerations  

1. Earnings Guidance: Focus on management commentary for forward-looking signals, especially in tech and consumer sectors.  

2. Tariff Exposure: Monitor industries reliant on Chinese imports (e.g., electronics, apparel) and companies with North American supply chains.  

3. Fed Watch: Employment and inflation data will dictate rate-cut timelines, affecting interest-sensitive assets like gold and biotech stocks.  

By aligning trades with these catalysts, investors can better navigate volatility and capitalize on emergent opportunities.

What a Day (3 Feb) to Trade Index Options... and Moderna (MRNA)

First, I took advantage of the market, volatility in MRNA options and once again played out some index options strategies.

First up, I sold MRNA 36.50 PUTS, MRNA took another leg down but held support and I sold 35.50 PUTS, both expiring on Friday.  The volatility makes these quite profitable.  MRNA, recovered off a strong bottom today with a large volume buy at the close and a strong after-market trajectory.  These close Friday so will probably take a good profit off the table tomorrow unless the market shows some stability.  Palantir reported great earnings, so that should buoy the Nasdaq and maybe some sympathetic action on the SPY.

For index options, same catalyst with different message, Tariff pause with Mexico caused a reversal in a former 600-point fall in the DOW futures and a recovery to green.  Canada Tariffs on-hold now as well, maybe another catalyst for tomorrow's indexes.

SPY followed suit.  You can see the volatility and opportunity today and news catalyst provides.  These are 1 contract watchlist items for Long-Puts expiring today 3 Feb 2025.

Shorting The Indexes on News Catalyst

 As I still work through options trading strategies on the indexes.  Friday was one obvious way to do so.  News of Tariffs sent the S&P tumbling throughout the afternoon.  Buying PUTS at the money on the news would have proved profitable.  The SPI was up around 610 in morning trading...