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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (23861)	5/1/2006 10:56:05 AM
From: E_K_S	Read Replies (1) of 78744

Hi Paul - Bristol-Myers Squibb Co. (BMY) is another drug company that has traded sideways for quite sometime and is in the process of rebuilding their drug pipeline. Both LLY and BMY pay very good dividends but it maybe another 12-18 months before their revenue growth resumes. The market try's to discount this and by the time several quarters of positive (growing) revenue is booked, the stock has already moved higher. What I have done is written "in-the-money" covered calls that expire after the x-dividend date. This way I will capture the dividend and the option premium. If the stock is called away, I have the opportunity to rebuy the stock at current or lower levels. At some point out in the future, I will stop writing the calls and let the market bid the stock higher in anticipation of these new revenues from their growing drug pipeline. My last LLY purchase was called away at $55 after collecting the dividend. I was going to revisit the stock in May at prices around $51-$52 (the low end of their long term trading range). The stock goes x-dividend May 11, 2006. It might be a good time to re-establish my position. EKS

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