Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (23861)	5/1/2006 10:56:05 AM
From: E_K_S	Read Replies (1) \| Respond to of 78740

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