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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Jerome who wrote (4752)3/1/2007 2:55:57 PM
From: Bridge Player  Read Replies (1) of 5205
 
My blue-chip covered buy-write play of the week.

Buy Amgen AMGN at 62.20, write the July 65 for 3.40, for net cost of 58.8. If-called return is 10.5% in about 4 3/4 months. If not called, you own a prime blue-chip biotech at about 13.2 times 2007 earnings, and about 11.8 times 2008 earnings (Yahoo!, and 2007 reaffirmed by Amgen today), with no doubt additional writing opportunities after July if so desired.

The negative publicity over their anemia drugs is creating an opportunity.

Without looking it up, my impression is that AMGN has mostly sold at multiples of 20 and above.
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