Wednesday, October 4, 2017

Teva trade not for the faint of heart

Looking for a deal?  TEVA Pharmaceuticals, symbol TEVA,  has nothing but trouble and their stock price reflects that trouble.

stock chart

 They are a provider of generic pharmaceuticals and competition is eating their lunch.   TEVA cut their dividend and is soul searching for an answer.   Debt has soared to a debt to equity ratio of 1.25 (source ycharts.)  They still do a lot business and if you think they are not going out of business and that their stock price is about as low as it will go, here is a series of call options to consider.

I find the October 27 call which is only 23 days away as the most enticing.  A 3.24% yield on my basis and a total return of 9% should the stock be called away is hard to find.  I don't trust TEVA enough to go out to December where the call yield is 5.6% and the return if called away is nearly 15%.

This is not for the faint of heart but once in a while, bad news can provide a trading opportunity.  I repeat this is a trading opportunity rather than an investment.

M* MoneyMadam
Disclosure:    Long TEVA