Bristol Myers (BMY) PriceWatch Alert Down To $18.15 Break Even

Posted: Friday, February 20, 2009 8:07 AM EDT

Bristol Myers (NYSE: BMY) closed yesterday at $20.51. So far the stock has hit a 52-week low of $16.00 and 52-week high of $23.98. Bristol Myers stock has been showing support around 20.00 and resistance in the 21.38 range. Technical indicators for the stock are Bearish and S&P gives BMY a positive 4 STAR (out of 5) buy rating. BMY appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Sep '09 20 covered call (BMY ID) for a net debit in the $18.15 area. That is also the break even stock price for this trade. This covered call has a 211 day duration, provides 11.51% downside protection and a 10.19% assigned return rate for a 17.63% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the BMY Jan '10 15 Call (WBM AC) and selling the Sep '09 20 call (BMY ID) for a $3.74 debit. The trade has a 211 day life and would provide 8.63% downside protection and a 33.69% assigned return rate for a 58.00% annualized return rate (for comparison purposes only). Bristol Myers has a current annual dividend yield of 5.84%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]

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