With Valentino Rossi out until mid-August at the earliest, his Fiat Yamaha team-mate Jorge Lorenzo has quietly moved to the top of the Moto GP ladder, taking his fourth win out of six races at the classic Assen track in the Netherlands last weekend. Lorenzo was fastest in every session, took pole, got hounded for a bit by Repsol Honda’s Dani Pedrosa and a resurgent Casey Stoner on the Marlboro Ducati, but then as his harder rear tire came in he simply motored off into the distance. Stoner pounded on Pedrosa for a while but couldn’t get past, finally fading back to finish third, his first podium of the year.

Stoner and Pedrosa both benefited from great starts, while Ben Spies on his Tech 3 Yamaha also got a superb jump, quickly moving into second behind Lorenzo and holding up Pedrosa and Stoner for several laps. He eventually finished an excellent fourth, proving that his podium third place in the U.K. the previous weekend was no fluke.

With a 47-point series lead at the one-third point in the series, Lorenzo is looking strong for the 2010 title, particularly with Rossi out of the picture indefinitely and nobody else able to consistently match his pace.

A dark horse for “most improved rider of the year” has to be Randy de Puniet, on the LCR Honda team, the smallest and most cash-strapped team on the circuit. De Puniet was near the top of the time sheets both at Silverstone and here at Assen, and had a wrestling-match style battle with Repsol Honda’s Andrea Dovizioso in the last few laps for sixth. Despite obvious traction problems from badly worn tires, de Puniet passed the factory bike several times, and only just missed out on fifth in the last corner, to his obvious fury and frustration.

Nicky Hayden, on the second Ducati, had his worst outing of the year, finishing seventh. He had an okay start but got blocked in the first turn and lost a lot of time both there and getting past the blockers, and by then he could do nothing about the leaders despite running at nearly their pace.

Silly season has started early this year, with chit-chat and rumours about 2011 taking more blog and magazine space than the actual racing. All four of the “aliens” — Rossi, Lorenzo, Pedrosa, and Stoner — have contracts ending this year, as in fact do many of the other riders. That makes the game of musical chairs even more active than it usually is.

The latest rumour is that Stoner has decided to leave Ducati for Honda, who are desperate for somebody who can win consistently (Pedrosa and Dovizioso just haven’t delivered the goods). Honda sponsor Repsol insists on a Spanish rider, so Pedrosa’s seat is probably safe, except that Ducati has been chasing him.

Over at Yamaha, Rossi has been asked to take a big salary cut of several million euros as part of an austerity budget. He was apparently willing to consider it until he found out that his cut would go to double Lorenzo’s salary; now he’s not a happy camper. Back in Italy, Philip Morris (Marlboro cigarettes, Ducati’s main sponsor) would kill to get Rossi on a Ducati, and have reportedly offered him 15 million Euros to join the squad. If Rossi does that, suddenly Pedrosa is more or less stuck with Honda, unless he moves to Yamaha. But since he and Lorenzo don’t get along …

From cmgonline.com, by Larry Tate, June 29, 2010

National’s Tau Henare says tobacco company Philip Morris may be forced to appear before the Maori Affairs select committee’s inquiry into the tobacco industry. British and American Tobacco have previously fronted but Henare, who chairs the committee, told the Sunday Star-Times that Philip Morris had refused. “It’s about respect for the constitutionality of the Parliament. We make laws, we get rid of laws, and I think we deserve a bit of respect,” Henare said.

He wrote to the company last week warning it he will ask Parliament’s Speaker Lockwood Smith to issue a summons to force it to show up.

Under Parliament’s rules this is possible but is rarely used.

A spokeswoman for Philip Morris said the company “would consider the committee’s request to appear before it.”

June 7, 2010, tvnz.co.nz

Foot-square posters of decayed teeth, cancerous lungs, and stroke-damaged brains are sending a strong message about cigarettes in New York City — and sending some convenience store customers out the door.Retailers in the city, joined by the country’s Big Three tobacco firms including Henrico County-based Philip Morris USA, yesterday filed suit in federal court to overturn a new city Board of Health requirement to post the signs, which began to be enforced March 1.

“Our customers are nauseated by graphic images of diseased organs,” said James S. Calvin, president of the New York Association of Convenience Stores.

“People coming in to buy milk, a lottery ticket, they have to look at those things,” he said. “We’ve literally had people say: ‘I’m not coming into your store anymore; I don’t want my kids to see that.’”

The signs must be posted either within 3 inches of each cash register or at each place where tobacco products are displayed. In the often-cramped space of city stores, the signs can end up taking space that store owners would rather use to display or sell products, Calvin said.

Philip Morris USA, meanwhile, is concerned that the city is trying to pre-empt federal law governing warnings on tobacco products.

“We don’t want to see a patchwork of regulation here,” said David Sutton of Altria Client Services, acting as spokesman for the cigarette company, which is owned by Altria Group Inc.

Sutton said Philip Morris is also concerned because the signs can displace point-of-sale advertising, one of the few places left for its marketing materials under federal regulation and a 12-year-old legal settlement with the states.

The company also believes the regulation violates the First Amendment guarantee of free speech.

The complaint the retailers and tobacco companies filed says the signs do not describe the risks of smoking in purely factual terms while their exhortation to “Quit Smoking Today” and vivid images reflect “a message that [we] would not carry at the point of sale,” if not required to.

The city’s Law Department is reviewing the complaint, a spokeswoman said.

By DAVID RESS June 4, 2010, timesdispatch.com

Tucked between the new high-speed cigarette-makers and pack-loaders in Philip Morris USA’s giant South Richmond plant, there now are lots of head-high, Plexiglas-walled boxes.
Inside, robot-arms load rolls of cigarette paper or package and carton blanks, keeping a continuous feed of material flowing. Overhead, a conveyor belt, also walled in with clear plastic, forms an eight-loop-high spiral of cigarettes.

The extra 3 feet between the cigarette-making machines and the beeping driverless cars that bring pallet-loads full of cigarettes to the loading docks are visible signs of a $230 million investment that the nation’s No. 1 cigarette-maker has made to consolidate operations in Richmond.

“We’re about 98 percent done,” Eric Schardt, director of cigarette manufacturing, said about the changes at the plant, during a rarely offered tour of the secure area.

“And we did it while continuing to produce product.”

The investment came as Philip Morris USA, a unit of Henrico County-based Altria Group Inc., consolidated all its cigarette-making in Richmond last July, when it closed its relatively new plant in Cabarrus County, N.C.

With the consolidation and the modernization here, the Richmond plant now makes about 149 billion cigarettes a year.

Adding to the challenge of doing everything in one place is that Philip Morris USA has launched dozens of new varieties in the past few years.

It now makes 27 different kinds of Marlboros in 43 different kinds of packaging. In addition to Marlboros, Philip Morris makes 88 other kinds of cigarettes in 114 packages.

It puts a premium on flexibility and on cranking out lots of cigarettes.

“We can handle orders from 360,000 a day of one brand to 500 million of another, at the extreme,” Schardt said.

. . .

Each of the new machines in Bay 1 can produce 10,000 cigarettes a minute, using air pressure to shoot the equivalent of about 3/100 of an ounce of tobacco per cigarette into an endless tube of paper that’s moving through its rollers at a rate of more than 22 mph.

That’s 25 percent more cigarettes per minute than the old machines, which Philip Morris still uses in Bay 3 of the plant, for the smaller runs of its less popular brands.

One worker minds two of the high-speed machines in Bay 1. Each machine has its own operator in Bay 3.

One reason for having one worker overseeing one machine in Bay 3 is that the paper and unfolded packaging materials must be loaded onto the machines by hand, and often enough at the cost of sore backs and pinched fingers.

In Bay 1, ingredients come on larger pallet-loads that are fed into machines automatically by those robot arms in their Plexiglas-walled boxes.

Another key difference: There is one shipping-case machine for each six of Bay 3’s cigarette-makers. In Bay 1, there is one case machine for each pair of cigarette-makers.

In Bay 3, Robert Warren, manager of cigarette manufacturing, and his crew constantly are juggling to run the 10 different varieties the bay’s 18 machines can handle.

In Bay 1, that headache’s gone.

Altria employed the equivalent of 4,613 full-time workers in the Richmond area as of Jan. 1. The company won’t say how many work at the South Richmond plant — it keeps data about its production closely guarded so competitors don’t get clues about its operation.

. . .

Even Bay 3, though, benefits from other investments.

Hand-held scanners, tracking numbers and tiny quarter-inch-square gray-and-white markings on packaging material signal automated loaders in the adjoining warehouse to pull exactly what papers, foils, films and packing flats each machine in the plant needs, when operators are about to run low.

The old Bay 3 machines have the latest computer monitors: Sensors test the cigarettes shooting out of the machine to make sure each is within tight limits for weight and how tightly the tobacco leaf inside is packed.

There are brand-new testing machines in the filter-making room, too.

Instead of the old days when operators grabbed a handful of new filters and used calipers and a scale to see if they met standards, the new shoulder-high metal boxes can pull filters after they’re made.

The machines measure weight and circumference and even blow through air to check what cigarette makers call “resistance to draw,” which means how hard a smoker must drag to get a puff.

. . .

A big part of Philip Morris USA’s investment in the plant is information technology.

The cigarette-making machines, the pneumatic feed-lines from the tobacco-storage silos in the plant’s basement, and its warehouse and the other cigarette-making supplies all talk to each other all of the time — thanks to technology.

Battered, pistol-shaped hand-held scanners are used all over — most workers are assigned one, and most have specially installed rubber guards at the corners, too.

“They really get a workout,” said Schardt, picking up a particularly well-used scanner.

But then, most days feel like a sprint at the plant.

“From the time the tobacco comes up from downstairs, to pallets of cases being loaded on the trucks, you’re talking maybe an hour,” Schardt said.

By David Ress and John Reid Blackwell, TIMES-DISPATCH STAFF WRITERS

Tobacco giant Philip Morris is funding an aggressive ad campaign against the Indian tobacco industry, urging the state to collect taxes on cigarettes sold on Indian reservations.

Indian leaders and business people say the ads are just the latest effort to force sovereign nations to collect taxes for the state, effectively putting them out of business – a scenario that would help Philip Morris’ efforts to dominate the cigarette market.

Philip Morris’ full page ads began to appear in newspapers in Buffalo, Syracuse, Albany, and other cities in north central New York during the first two weeks of April.

“Albany Lets Billions Slip through Its Fingers. Tax Dollars We Need for Vital Services Go Uncollected,” the ad says.

Playing off the fact that the state faces a $9.2 billion deficit, the ad uses citizens’ anxiety about the economy as an emotional hook.

“The state loses revenue. Retailers lose sales. Their employees could even lose jobs. And it adds to the burden on hardworking taxpayers,” the ad says, disregarding the fact that Indian citizens also pay federal income taxes and state taxes on off-reservation purchases.

“There is nothing altruistic about Philip Morris,” said James Ransom, one of the chiefs of the St. Regis Mohawk Tribe. “Their primary mission is to sell cigarettes and eliminate the competition. They will do whatever they have to do to do that and they know that tribes are the competition. They have little respect for the sovereignty of tribes because we represent a threat to their bottom line.”

At first glance, the ad’s Web site may give the impression that the “we” referred to is a citizens’ group, but the “paid for by” attribution and site reveal that Collect the Tax New York is supported by Altria Client Services, Philip Morris’ parent company, and the New York Association of Convenience Stores – the arch enemies of Indian country cigarette retailers with whom the convenience stores compete.

But it wasn’t always that way, said Robert Hilburger, the director of business development for the Oneida Indian Nation.

Philip Morris, for more than a decade, encouraged and helped build up Native American cigarette sales by signing contracts with Indian retailers for preferential programs that would provide stores with racks, signage, special coupon sales, and “backside” payments for every carton of Marlboros sold, a strategy that is legal and widely practiced in the trade, Hilburger said.

“The reason they were so good to us is because they wanted low-priced product to get out to the public. Now they have utter disdain for the Native American retailers that helped them build to the point of monopoly they have today. We believe now that because their sales are being impacted by Native-manufactured cigarettes that are retailed through Native stores, they hope to knock us out of business altogether so they could increase their market share even more.”

Philip Morris’ attack ads are the latest volley in New York’s longstanding cigarette tax war with Indian nations. The state claims it’s losing millions or billions of dollars in “lost taxes,” while the nations say they are not responsible as sovereigns to collect state taxes.

The ads have riled Native retailers.

“If I had my choice, I’d never sell another Marlboro in my store again. Right now, they’re on the bottom shelf. I can’t support somebody that’s trying to put us out of business,” said Sally Snow, a Seneca businesswoman and chair of the Seneca Free Trade Association.

Snow said Philip Morris was clearly losing market share on the reservations because of the success of Indian manufactured cigarettes.

“I probably sell 10 to 1 Seneca cigarettes over Marlboros.”

Native-manufactured cigarettes have a cost advantage over Philip Morris products. Currently, Marlboros cost $65 a carton while Native-manufactured Niagara brand cigarettes cost $32 a carton.

Indian retailers can’t fight Philip Morris’ big bucks ad campaign, Snow said, “so we’re pretty much just trying to expose them for what they are and let people make up their own minds. We have a lot of face-to-face customers so we try to get to them through those transactions.”

The Indian tobacco industry, which contributes hundreds of millions of dollars each year to the general economy directly and indirectly through jobs and tobacco industry-related businesses, is under siege right now.

Last year, President Barack Obama signed the Family Smoking Prevention and Tobacco Control Act, granting the Food and Drug Administration federal regulatory authority over tobacco products.

Last month, Obama signed the Prevent All Cigarette Trafficking Act, which bans cigarette deliveries through the U.S. Postal Service.

And last month, New York state posted new regulations that would effectively cut off supplies of untaxed cigarettes to Indian businesses, if enacted.

Altria Client Services spokesman David Sutton declined to confirm directly the widely held belief that the company wrote or helped write the FSOTCA and PACT Act legislation and instead referred to its Web site, which states that “Philip Morris USA actively supported” both pieces of legislation.

Both the FSOTCA and the PACT Act will hugely benefit the tobacco company. FSOTCA puts onerous demands on small manufacturers, such as requiring changes in the design and packaging of cigarettes and restrictions in advertising and promotions, among other things, that will be easily accommodated by big budget Philip Morris, but not by small manufacturers.

And the PACT Act is a boon to the company by eliminating the enormous Internet mail order sales that Indian country nations, particularly the Seneca Nation of Indians, has developed and nurtured since the early 1990s.

Hilburger said that he and another Oneida representative met with Philip Morris representatives around two years ago and told them the Oneida Nation was continuing to negotiate with the state to try to reach a settlement regarding tobacco sales.

“The Philip Morris reps said they encouraged a negotiated settlement and wouldn’t do anything to hurt it, that they would maintain a position of neutrality with regard to the state tax situation. Then 14 days ago out of the blue and without even the courtesy of a phone call to tell us we’re going to be attacked, they take out these ads and they almost label us as criminals, even though they’re the ones who helped grow our business so greatly,” Hilburger said.

Asked why Philip Morris abandoned its position of neutrality, Sutton said, “I’m not going to comment on Philip Morris USA’s relationships with the company’s specific retail partners.”

But the company had already abandoned its position of neutrality by 2008 when it was directly involved in writing anti-Indian cigarette tax legislation in New York state.

The company’s lobbyists were active in the state capitol of Albany late last year and early this year leading up to the posting of the new tax regulations. The Altria Group made political contributions of $127,190 in 2009 and in early 2010, according to a Gannett Albany Bureau report. The payments included $50,000 to the Democratic Senate Campaign Housekeeping Committee and $30,000 to the equivalent committee for Republican senators. Altria spent $224,558 on lobbying in the second half of 2009, records filed with the state Commission on Public Integrity show.

Asked about the status of the new regulations, Morgan Hook, a spokesman in Gov. David Paterson’s office said, “We do not comment on legislation that has not passed both houses. We have no position on the bill, as it has not been passed yet and is essentially a draft.”

By Gale Courey Toensing, Indiancountrytoday

Major League Baseball and the players’ union should “take action to end the use of smokeless tobacco by big-league players,” Rep. Henry Waxman, D-Calif., chairman of the House Committee on Energy and Commerce, said Wednesday.

Executives from Major League Baseball and the players’ association joined U.S. public-health officials to testify before the panel on the prevalence of smokeless tobacco and whether its use by professional athletes influences children.

“Like many generations of Major League Baseball players, I started using spit tobacco because I saw other players doing it, and I thought it was part of being a major-league player,” said Joe Garagiola, a television announcer and former player. “This is a dangerous, deadly habit.”

Tobacco of all kinds is banned in minor-league baseball, a policy Garagiola urged major-league players to adopt. While major-league players aren’t allowed to smoke cigarettes in uniform in view of spectators, chewing tobacco is different, said David Prouty, chief labor counsel for the Major League Baseball Players Association.

“Cigarettes impact the ability to play the game, are banned from public use under a variety of state and municipal laws, and may endanger the health of those in the immediate area,” Prouty said. “Baseball players should not be prohibited from using substances that are perfectly legal and available to the general public.”

Tobacco companies led by Philip Morris and RJ Reynolds argue they should be allowed to market smokeless products as a safer alternative to cigarettes.

“Some adults who would otherwise continue smoking may be willing to move to a smokeless-tobacco alternative to cigarettes,” said James Dillard, a senior vice president at Altria Group, which owns Philip Morris. “Smokeless-tobacco products are substantially lower on the risk continuum than cigarettes.”

Health officials say they worry chewing tobacco will have the opposite effect: that it may act as a gateway to cigarettes, and that children could become addicted to tobacco by emulating its use by baseball players.

“We don’t let baseball players go stand out in the field and drink beer,” Waxman said during the hearing. “The MLB Association won’t let them stand out there and smoke cigarettes,” and chewing tobacco also should disappear from games, he said.

Waxman last year supported a bill giving the Food and Drug Administration (FDA) authority to regulate tobacco products. The law bans tobacco-brand sponsorships of sports and entertainment events among measures aimed at reducing underage smoking.

Nine of every 10 people who die from mouth and throat cancers used tobacco, according to the American Dental Association (ADA).

Tobacco products also are linked to higher rates of gum disease, one of the leading causes of adult tooth loss, the ADA said in an October letter to the FDA.

Terry Pechacek of the Centers for Disease Control and Prevention, and Deborah Winn of the National Cancer Institute testified about the links between smokeless tobacco and cancer, and the addictiveness of smokeless tobacco.

Pechacek said smokeless tobacco can cause oral cancer and pancreatic cancer, and has been linked to fatal heart attacks.

Banning use would require negotiations with the players union, said Robert Manfred, an executive vice president for Major League Baseball.

“Like drug testing, the regulation of player use of tobacco products is a mandatory subject of collective bargaining with the players association,” he said. “But unlike performance-enhancing substances, smokeless-tobacco products are legal in all 50 states for sale to, and consumption by, adults.”

By Meg Tirrell, Seattletimes

MANILA, Philippines–Tobacco control advocates on Thursday called the merger of leading cigarette companies Fortune Tobacco Corp and Philip Morris Philippines Manufacturing Inc (PMPMI) a “kiss of death blown to many Filipinos.”

Health Justice, a non-government organization that aims to bridge the gaps between health science and law, said it expects the 2 cigarette manufacturers to also combine their resources in lobbying to weaken tobacco control measures.

“The government can expect more tobacco-industry backed leaders or policy makers, more organized lobbying techniques, more corruption, more smuggling, less tax collection, and less compliance with tobacco control laws,” said lawyer Deborah Sy, executive director of Health Justice.

She specifically reacted to news reports that, “When asked which group (Philip Morris or Fortune) initiated the [merger] talks, PMPMI Chris Nelson said: ‘We kissed at the same time.’”

Early Thursday, reports said that PMPMI and Fortune “concluded an agreement to form a new company, Philip Morris Fortune Tobacco Corporation.”

“Each contributed selected assets and liabilities into the new company, with each party holding an equal economic interest,” reports quoted PMPMI’s Nelson.

Fortune Tobacco, owned by business tycoon Lucio Tan, will control the finances and the distribution, while multi-national PMPMI and maker of top-selling brand Marlboro, will focus on manufacturing, operations and management of the cigarettes.

Fortune, which produces leading local cigarette brands Fortune and Hope, corners 60% of the industry share in the country. PMPMI, which operates a large cigarette manufacturing plant in Batangas, has a 30% share.

With the union of the two companies, 90% of the cigarette market will be in the hands of a single group.

This is not the first time that PMPMI had bought into a local cigarette company in a country where it’s operating. In 2005, Switzerland-based Philip Morris International (PMI) acquired majority of Indonesia’s largest tobacco company, PT HM Sampoerna Tbk. Sy said that PMI’s move had resulted to a more “aggressive tobacco industry.”

With PMI’s using a local name, it has the chance to effectively market its own brands. At the same time, PMI is able to lobby systematically against anti-tobacco laws in Indonesia.

Newsbreak earlier reported that tobacco companies, through its group Philippine Tobacco Institute, allegedly distribute lobby money to congressmen, and sometimes contribute to their campaign kitties, to block tobacco control proposals, like putting graphic health warning on tobacco products and increasing its taxes.

The bills, which were not approved before the 14th Congress went on recess, sought to discourage the public from smoking. The World Health Organization recorded some 90,000 smoking-related deaths every year worldwide that can be attributed to high cigarette consumption.

by Lilita Balane, Abs-cbnnews

Cigarette maker Philip Morris International Inc. said Thursday that raising its prices and selling more cigarettes in emerging markets combined with the benefits of a weaker dollar to boost its fourth-quarter profit by 5 percent.

The seller of Marlboro, Parliament, Virginia Slims and other brands of cigarettes overseas also announced a new three-year, $12 billion share buyback program to begin in May.

Its shares rose $1.86, or 4 percent to close at $48.67 Thursday.

Philip Morris International _ the world’s second-largest cigarette seller after China’s state-owned company _ said its quarterly profit rose to $1.5 billion, or 80 cents per share. That compares with $1.45 billion, or 71 cents per share, a year earlier. And the profit tops the 78 cents per share analysts forecast.

The company’s revenue spiked 10 percent to $6.72 billion. Analysts expected revenue of $6.49 billion.

The results capped a difficult year, when the company’s profit fell 8 percent to $6.34 billion, or $3.24 per share. In 2008, it earned $6.89 billion, or $3.31 per share. Its revenue fell 3 percent to $25 billion, from $25.71 billion in 2008.

CEO Louis C. Camilleri said in a statement that the company compensated for consumers buying cheaper cigarettes worldwide _ and for the weak economy _ by raising its prices, increasing its market share and cutting costs during the fourth quarter.

In a conference call with investors, Camilleri said the company performed well “despite challenges we faced in numerous markets that bore the brunt of the global economic downturn,” which is a “testament to the vigor and breadth of our brand portfolio.”

While tax hikes, smoking bans, health concerns and social stigma have cut cigarette demand worldwide, the decline is less stark in its newer markets outside the United States. Growing demand in Africa, Asia and the Middle East also has helped to offset declines in the European Union, Latin America and Canada.

The World Health Organization estimates about 30 percent of adults worldwide smoke. The U.S. Centers for Disease Control and Prevention estimates that about 20 percent of American adults do.

Philip Morris International’s cigarette shipments edged up less than 1 percent to about 218.2 billion cigarettes during the quarter. Sales in Eastern Europe, the Middle East, Africa and Asia rose 4 percent to $1.87 billion. In Asia, sales rose nearly 17 percent to $1.71 billion.

But the company’s revenue also rose 11 percent in the European Union to $2.37 billion _ a 4 percent increase, excluding the benefit of the weaker dollar.

Companies that sell goods internationally convert revenue from foreign currencies into dollars when they report their financial results. If the dollar weakens relative to those currencies, revenue in those currencies translates into more dollars.

The company, which has offices in Lausanne, Switzerland, and New York, expects to earn $3.75 to $3.85 per share for 2010. Analysts expect a 2010 profit of $3.82 per share.

Philip Morris International was spun off in 2008 from Richmond, Va.-based Altria Group Inc., owner of Philip Morris USA.

The stock has traded between $32.04 and $52.35 during the past 52 weeks.

Kevin Duffey writes: As the market seems to be in correction mode in recent weeks, I’m starting to become more focused on some positions that I want to accumulate. One of these has been Philip Morris Int’l (PM).
For a potential play, you can now sell a January 2011 put with a $40 strike price for $3.20 premium (as of this writing). Note that you can collect $320 on essentially $4000 in cash (for every put contract) which is an 8% return. It’s actually slightly higher since the time to hold the option is less than a year.

Compare the $3.20 you can collect versus holding shares of the stock. The annual dividend payout on PM is $2.32. So by selling the put versus holding the stock, you can earn an additional $.88 per share between now and January of next year. Even more, you’re essentially obligated to PM shares at $40 per share versus today’s price of around $46 per share, so if you end up owning the shares, your cost basis is based on $40 per share versus today’s price.

I think it’s a great way to collect an 8% return with very low risk. Your only risk is if PM goes well below $40 and you’re required to purchase the shares at $40; obviously, this is still better than buying shares at $46. PM is a great long term holding, consider selling puts to pick up shares at lower prices and earn a higher return in the near term.

Remember, if you do this strategy, be sure you have the cash in your account to purchase the shares if the strike price hits.

If you want to be more aggressive, and you wait for the market to move even lower, you will potentially be able to sell the Jan 2011 $40 Puts for even more income, or target a strike price even lower than $40. Then again, you might not get that opportunity.

Disclosure: I hold shares of Philip Morris Int’l (PM) and am looking to buy more as the market move lower.

By Kevin Duffey, Marketoracle