Pfizer (NYSE: PFE) sees mixed options activity as stock hits new high

Pfizer (NYSE: PFE) shares popped to a new intraday high in Friday’s trading, closing up 11 cents by the close to $19.49. With the stock sitting near new highs, some investors may be wondering if it is time for a pullback.

The February 20 put was active on the day, as more than 15,000 contracts changed hands versus open interest of fewer than 2,000 contracts. Just before 11:00 AM Eastern time, large blocks started trading near the ask price at $1.13 per contract. The put option closed two cents higher on the day despite the gain in the stock. It is therefore very likely that these options were bought to open, and the buying pressure sent the shares higher. Open interest expanded this morning to 14,734, indicating that nearly all of Friday’s volume traded to open.

We also saw activity on the January 19/February 20 call time spread. The January call saw more than 78,000 contracts trade on open interest of 91,000, all of which expired at the end of Friday’s trading. The February 20 call, meanwhile, saw more than 68,000 contracts change hands, the lion’s share of which traded to open, as open interest expanded to 104,139 from 42,098 on Friday.

Within the first hour of trading last Friday, a block of 52,698 contracts traded at the January 19 call and appears to have been priced at 43 cents (per contract). The February 20 call, meanwhile, saw the same-sized block trade at 28 cents per contract. It appears as though the investor in question sold the January 19 calls to buy the February 20 calls, collecting 15 cents for the spread transaction. With January 2010 options a thing of the past, the investor now essentially holds a long, out-of-the-money call position at the 20 strike.

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