Long-term Trade on Pfizer

All major US indices have been volatile are are in the negative YTD due to the pull back over the past 2 weeks.  While this correction has impacted higher beta stocks (tech, biotech) more than safer sectors, there have been some significant pull backs in low beta stocks with reasonable PE's right now.  In the current conditions we would like to pick up long positions on stocks that don't have a high risk of PE compression.

Pfizer fits that profile, it currently trades at a Price to Earnings ratio of 9.38, and the stock has come down from almost $33 in March to $29.49 today.  This is a 10% correction, and if you look at the big picture the stock is in a clear uptrend.  We like this picture, and even though it is currently sitting on its 200 DMA, we are looking at a longer term view with this trade.  

We are selling the January 2016 $30 Put for $4.05, and buying the January 2016 $32 Call for $1.93.  This trade nets us a credit today of $212 per each pair that we trade, and we get long exposure to the stock.  If the stock trades below $25.95, we will have to buy the stock at $30 minus the credit that we received today.

These options are known as LEAP's because they are so far out, and we have 643 days until these contracts expire.  This is a long-term position, so we aren't going to get worried about short-term movements.