Large unusual trading volume in Pfizer, Inc. (PFE) put options that expire 30 days from now signals investors' bullish outlook on PFE stock. It trades for just over 8 times earnings, well below its 10-year historical average P/E ratio. 

PFE is at $25.24 in midday trading, still below prior highs in February, but up from lows in early April. Today's heavy put options volume signals investors are bullish on PFE stock.

This can be seen in today's Barchart Unusual Stock Options Activity Report. It shows that over 25,000 put options have traded at the $25.00 strike price for expiry on Aug 1, 2025.

Investors who sell short these out-of-the-money (OTM)puts (i.e., strike price below the trading price) have the potential obligation to buy PFE shares at $25.00 if PFE falls to that price on or before Aug. 1. In return, they receive 56 cents in income immediately.

That works out to an immediate short-put yield of 2.24% (i.e., $0.56/$25.00).

It also means that the investor who shorts these puts has a lower potential buy-in price of $25.00-$0.56, or $24.44. That is 3.2% below today's trading price. So, investors have a good entry price.

This price is very cheap on a valuation basis.

PFE Stock Looks Cheap Here

P/E Ratio. Analysts now project earnings per share (EPS) for Pfizer this year of $3.06 this year, according to Barchart, and $3.09 next year. That is the same for 2026 at Seeking Alpha and Yahoo! Finance.

That means that PFE is trading on a forward price/earnings (P/E) multiple of just 8.2x (i.e., $25.24/$3.09 = 8.168).

However, this is well below its historical average forward P/E multiple. For example, Morningstar reports that its 5-year average has been 10.22x. Seeking Alpha says it's been 10.85x.

This implies that PFE's underlying value, assuming the stock reverts to its mean value, is 28% higher. Here's why.

10.5x (average multiple) x $3.09 2026 EPS = $32.45 Target price;

$32.45/$25.24 price today= 1.286 -1 = +28.6% upside

Dividends. Moreover, an investor who buys the stock now earns an annual yield of 6.81% (i.e., $1.72 dividends per share / $25.24).

But this is well over its historical average yield. For example, Morningstar reports that its 5-year average has been 4.23%. Yahoo! Finance says the 5-year average has been 4.58%, and Seeking Alpha says its 4-year average has been 4.70%.

So, using its average 4.50% yield, PFE should be trading (if it reverts to its mean yield) 51% higher:

$1.72 DPS / 0.045 = $38.22 Target price

$38.22 / $25.24 = 1.514 -1 = +51.4% upside

Summary Price Target. So, using a P/E model, PFE is worth $32.45, or almost 29% more, and using a dividend yield model, it's worth $38.22, +51% more. That implies PFE is worth at least $35.34 per share.

In other words, assuming PFE heads back to its historical average metrics, PFE could be worth over $10 per share more, or +40% higher.

So, no wonder investors are willing to sell short out-of-the-money (OTM) puts today. They want to set a lower buy in point and get paid a nice 2.2% yield over the next month. After all, the stock is potentially worth significantly more.