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The wheel on Pfizer (PFE): the dividend, the price, and the trend question

Pfizer is a wheel favourite for two reasons: 100 shares cost less than most big pharma names, and it pays a quarterly dividend. The question the wheel can't answer for you is the trend. Here it is worked out, loss and all.

Options guide · 8-minute read · Updated 2026-10-26

What Pfizer is like for the wheel

Pfizer (PFE) is a large drug company. Its sales jumped during the pandemic on its vaccine and antiviral, then fell back as that demand faded. The share price gave back most of its pandemic gains over the following years. It is a large, profitable company whose stock spent a long stretch making lower lows. Check the latest reports for where it stands now.

For the wheel strategy, that gives you:

• A low share price for a company its size. 100 shares need far less cash than 100 shares of most large pharma names. That is why small accounts gravitate to it.
• A quarterly dividend. The yield looked high for a while mostly because the price fell. A high yield from a falling price is a warning, not a bonus.
• Moderate Implied volatility. Premiums sit between a staple like Coca-Cola and a chip stock like Intel.
• Quarterly earnings, plus drug news. Trial results, approvals and lawsuits can gap a pharma stock on any day, not only on earnings day.
• Very liquid options, with weekly expiries.

Pfizer is here because people search for it. Nothing on this page is a recommendation.

The trend question

The wheel is a plan for a stock that goes sideways or drifts up. On a stock in a downtrend, each step of the loop runs into the same wall: the premium is small and the move down is bigger.

Before wheeling a stock that has been falling, look at the chart and ask two plain questions:

1. Where was the last place price turned around and went up? Has the stock held above it since, or broken below it again?
2. If it keeps making lower lows for another year, would I still be happy owning 100 shares at my strike?

If the second answer is no, the premium and the dividend don't change it.

The dividend: help, and a trap

The dividend is real money that lowers your cost over time. On the covered-call side of the wheel it also adds the early-Assignment trap: a call that is in the money just before the Ex-dividend date, with little time value left, can be exercised early. You lose the shares and the dividend together.

And a dividend is not promised. Companies cut them when earnings shrink. Check the current payout rather than assuming last year's.

Four months of the wheel on a falling stock (an illustration, not a trade idea)

The numbers are for a made-up pharma stock, XYZ, which pays a hypothetical dividend of $0.40 a share each quarter. They are not Pfizer's prices.

Month 1. XYZ is at $30. You sell a 30-day $28 put for $0.60 ($60). You set aside $2,800. XYZ falls to $26. You're assigned 100 shares at $28.

Month 2. You now own 100 shares at $28, cost basis $27.40 after the premium. You sell a $29 call for $0.30 ($30). XYZ drops to $23 after trial news. The call expires. The quarterly dividend lands: +$40.

Month 3. You keep the $29 strike (above your cost) and collect $0.15 ($15). XYZ slides to $21.

Month 4. A $29 call is now worth almost nothing. You sell a $24 call for $0.35 ($35), below your cost. XYZ ends at $21.

Four months in, you've collected $140 in premium and $40 in dividend, and you're down $520. If XYZ instead bounces to $26 in month 4, the $24 call gets your shares called away at $24: −$400 on the shares, +$180 collected, −$220 locked in, and the bounce you waited for is gone.

Why the roll only delays it

Many people, at the end of month 1, would roll the put instead of taking the shares: buy back the $28 put and sell a lower one further out. Rolling down and out can bring in a small credit. It also keeps you short a put on a stock that is still falling.

Say you roll from $28 to $26 for a net credit of $0.20. Next month XYZ is at $23. You're assigned at $26 instead of $28. That's $200 better on the shares, plus the $20 credit. You're still down $220 ($26 − $23 = −$300, plus $80 of put premiums), and still holding a stock making lower lows. The roll moved the loss. It didn't remove it. See rolling a cash-secured put down and out for the full math.

Before you wheel it

• Decide the price you'd own it at with no option attached. That is your put strike. If no such price exists, there's no trade.
• Size it as 100 shares of a drug company, which can gap on a trial result. Not as a premium trade.
• Write down the earnings date, the ex-dividend date and any known trial or approval dates inside your expiry.
• Never sell a call below your cost unless you've decided to sell the shares anyway.

Account note: covered calls are widely allowed in a TFSA or RRSP; cash-secured puts depend on the broker. US dividends in a Canadian account have withholding-tax rules, and options permissions differ by broker.

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