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Options Action: Johnson & Johnson

Monday, 22 Nov 2010 | 5:55 PM ET

Consumer products and pharmaceuticals maker Johnson & Johnson has seen a big run up as well as a Buffett endorsement in the past few months - with Berkshire increasing its stake in the stock.

How should you trade JNJ?

Fast Money’s oracle of options -- Options Action trader Mike Khouw of Cantor Fitzgerald tells us, “Against a long position, I would purchase the Jan 60/57.5 put spread for .25, buying the Jan 60 puts paying .55, and selling the 57.5 for .30.

***How Mike’s Trade Makes Money***
JNJ at 63.25
Profits $63.50 and above
Losses $63.50 to $59.70
Protection $59.70 to $57.50
Losses below $57.50

Options Action
Options trades on JNJ, with Mike Khouw, Cantor Fitzgerald.

* Learn more about this trade. Watch the video now


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Trader disclosure: On November 22, 2010, the day this video was recorded, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami Owns (AGU), (C), (NUE), (MSFT), (INTC), (BTU), (GS); Weiss Owns (MEE), (TSN), (QCOM), (JWN), (UAL), (CYT), (DIS); Weiss Is Short (UNH) Calls; Weiss Is Short (LCRX); Finerman's Firm Is Short (IJR); Finerman's Firm Is Short (MDY); Finerman's Firm Is Short (SPY); Finerman's Firm Is Short (IWM); Finerman's Firm Owns S&P 500 Puts; Finerman's Firm Owns Russell 2000 Puts; Finerman Owns (AAPL); Finerman Owns (BAC); Finerman's Firm Owns (GENZ); Finerman's Firm And Finemran Own (HPQ); Finerman's Firm And Finerman Own (JCG); Finerman's Firm Owns (JPM) Leaps, Finerman Owns (JPM); Finerman's Firm Owns (SKS); Finerman's Firm Owns (TGT); Finerman's Firm Owns (WMT); Seymour Owns (AAPL), (BAC), (INTC), (IPI), (POT), (HPQ); Jon Najarian Owns (SNDK); Jon Najarian Owns (AKAM); Najarian Owns (CRUS), Is Short (CRUS) Calls

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  Price   Change %Change
JNJ
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