Johnson and Johnson Stock (JNJ) Trade Ideas – Put Selling Once Again

Recently I did a couple of trades in Johnson and Johnson Stock which you can review here. I am getting ready for yet another Put Selling trade as Johnson and Johnson Stock looks set to pull back once again. Let’s look at the 6 month daily chart to see what is happening with Johnson and Johnson Stock.

Johnson and Johnson Stock 6 Month Daily Chart

The 6 month chart below shows a pattern that has developed within JNJ Stock. Earlier this year the stock ran up above $80 and then set up a level of resistance which I have marked as B in the chart below. This level of resistance was right around the $85 level. Part of the reason for this was because at $85 Johnson and Johnson Stock is fairly valued. Once you start trading in the stock above $88.00 the stock is definitely overvalued based on past PE, Cash flow and revenue growth.

At point A the stock ran up on May 22 and hit an intraday high of $89.99. This level at $90 is truly the top end value for the stock. You can see in the chart that the last run up this September took the stock to an intraday high of $90.72 but it never closed higher than $90.07. On Sep 18 it closed at $89.91, on Sep 19 at $90.07 and on Sep 20 at $89.68. In other words $90 really is a heavy top for the stock and it is overvalued.

At point C back in July the stock clung to $85 testing for support at that level, before breaking out and heading way too high in late July and early August when it had some days over $94.00 intraday. Only on one day though August 2, did JNJ Stock actually close above $94.00. Honestly, this stock was way overvalued. When it pulled back it stalled once again at $85 only this time just as at point C, $85 had become support.

Johnson And Johnson Stock Intraday At Present

At present the stock today broke through the Middle Bollinger Band which is basically a 20 day moving average. This is not a good sign and if the stock fails to recover the Middle Bollinger Band it will fall back and probably try to test the $85 level again. Whether it can break $85 is tough to say at this point but I will reassess if Johnson and Johnson Stock falls further this week.

Put Selling Johnson and Johnson Stock at $85.00

The $85 put strike in my books is ideal for Put Selling. It is very easy to defend by a simple roll down process. The $85 level is also strong support which means even if it does break the stock may wander back and forth at the $85 strike. This will give me plenty of opportunities to sell puts for bigger than usual premiums, wait for opportunities to buy them back for profits and then sell them again.

Johnson and Johnson Stock Put Selling Summary

To sum it up, this is a great opportunity and I will not be missing this one. I am already holding the $85 put strike for Oct 19 expiry so my focus will be more on the November 16 put options. I will most likely start with a small position of perhaps 3 to 5 naked puts at $85 for November expiry and then add more put contracts at $85 if the stock continues lower.

I think Put Selling Johnson and Johnson Stock in upcoming days makes for a near perfect trade. This is an enormous company with huge revenues that they keep growing, albeit slowly, annually. Johnson and Johnson Stock is the type of stock I love put selling.

There are lots of other articles on Put Selling Johnson and Johnson Stock on my website. I suggest those investors interested in long-term profit potentials consider reviewing the articles to gain insight into Put Selling strategies and how to apply them as well as how to read volume indicators to determine support levels in Johnson and Johnson Stock. The last article in the links directly below looks at the strategy I developed years ago which I call hide and seek covered calls for those investors with long-term positions in Johnson and Johnson Stock. This strategy boosts the dividend into double-digit annual returns.

Review Johnson and Johnson Stock Strategy Articles

Review Johnson and Johnson Stock Members Strategy Articles

Hide and Seek Covered Calls Strategy For Long-Term Holdings On JNJ Stock