JNJ: Johnson & Johnson a “Good Buy” For Bulls?

Mad About Options takes a look at the stocks getting coverage from Jim Cramer, Fast Money casts and other heavy hitters in the financial press and reviews strategies option traders might have used if they agree or disagree with these assessments of the underlying stocks.

The Pick – JNJ (JNJ):

On Oct. 16, a Fast Money cast member called Johnson & Johnson a “good buy.” JNJ shares are now trading at $60.80 at the time of this report.

Bullish Option Traders on JNJ:

Investors who are bulled up on JNJ could employ a buy write to go long on the stock. Investors could buy stock for $60.80 and sell January 60 calls for $2.05 to pay $58.75 for this trade. This buy-write will be profitable if JNJ shares expire higher than $58.75. Maximum gain on this trade is $1.25 minus commissions, and maximum loss is $58.75 plus commissions. For more options education on buy-write strategies watch this edition of Options Physics.

Bearish Option Traders on JNJ:

Bearish investors could employ a bear put spread, and buy April 80 puts for $20.30 and sell April 60 puts for $3. Investors pay $17.30 for this spread, which will turn profits if JNJ shares expire below $62.70. Maximum gain on this trade is $2.70 minus commission, and maximum loss is $17.30 plus commissions. For more information on bear put spreads tune into Options Physics.

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