After another volatile day that ended with a late rally, it remains unclear which way the market will head. Many consistent readers will have noticed that I am very bullish on the health care sector and on pharmaceuticals in particular.
On the whole, health care expenditures nationwide continue to grow. Additionally, the cheap dollar makes American medical and pharmaceutical products cheaper, and thus more attractive, abroad.
While I like health care on the whole, I focus on the big pharmaceuticals, because these companies make for strong value plays, and the associated deep in-the-money calls trade at low premiums. Today I will take a look at
, which I last
wrote about in June.
The company continues to be bogged down by concern over its pipeline. One thing investors need to keep in mind is that a company of Pfizer's size in the pharmaceutical field possesses the resources to not only research and develop its own pipeline but also to buy a pipeline via a merger or acquisition. Pfizer recently unveiled a biotherapeutics center in the San Francisco Bay area.
This is demonstrative of the company's commitment to enhancing its pipeline and bringing about a new generation of innovative treatments. Trading barely above its 52-week low, this stock clearly deserves attention. The stock is in a very strong technical position and is due for a bounce up.
As a result, I will place a limit order to buy 10 March 17.50 deep-in-the-money calls (PFECW) for $6.50 or better. If I get filled, I will be paying only 33 cents in premium, which means I will control 1,000 shares of common stock all the way out until the third Friday in March, and rather than pay $23,670, I will be paying $6,500.
In closing, I want to take a moment and let all of my loyal readers know that I will be taking some time off after this week. I will keep you all posted. I appreciate all of your support.
Always remember: Life is a journey; enjoy the ride!
At the time of publication, Dykstra had no positions in stocks mentioned.
Nicknamed 'Nails' for his tough style of play, Lenny is a former Major League Baseball player for the 1986 World Champions, New York Mets and the 1993 National League Champions, Philadelphia Phillies. A three time All-Star as a ballplayer, Lenny now serves as president for several privately held businesses in Southern California. He is the founder of The Players Club; it has been his desire to give back to the sport that gave him early successes in life by teaching athletes how to invest and protect their incomes. He currently manages his own portfolio and writes an investment strategy column for TheStreet.com, and is featured regularly on CNBC and other cable news shows. Lenny was selected as OverTime Magazine's 2006-2007 "Entrepreneur of the Year."