I read a Kipplinger Letter on Fisher Scientific (FSH) and it is one good stock!
Fisher is in the very dull but very steady business of medical supplies and is on track for many years of 16% growth. It was held down by the sector and poor outlook from its competitors until 11/9 when it handily beat estimates and raised its guidance. Apparently, Fisher had been the one causing all the problems for its competition!
The stock jumped 12% in one day but has settled down there at $65ish since then. $65 is the same price it opened the year with so it is still a really good value. This stock will never be a great mover, but it should be nice and steady over a long period of time, which makes it the perfect stock to sell calls against!
The way to play this stock is to buy the January ’07 $60 calls for $10.50 and sell the Jan ’06 $65 calls for $1.50, a 13% return in your first month. This covers you for a drop almost all the way down to the 200 dma of $62 and gives you an additional .85 of wiggle rooom before the option goes in the black.
The first month or two that you do these trades are the trickiest, because you have to set the money you get aside in case you get called away (probably with no profit if it goes up fast) but, once you get a month under your belt, a stock like this can become a nice little annuity for you.
My strategy on this stock is to sell the calls when I get > $1.50 and buy them out whenever they drop by half or more. This stock can go up or down $1 in a day but it’s a 100 year old company you can generally rely on.
http://finance.yahoo.com/q/bc?s=FSH&t=my&l=on&z=m&q=l&c=
It looks to me like it’s closer to a low than a high so this is a good entry point and we know this is a healthy long-term sector so I think this is a good place to park some long-term money.
