Saturday, April 20, 2013

JNJ Finishes Up 16 Consecutive Weeks

When you look at a weekly chart of JNJ it has had an amazing run up. It has finished higher 16 weeks in a row. I started getting interested from the short side around $81-$82 share. At first I got short via some put spreads and on a day last week we had over a $1.50 sell off in the stock where I cashed in the put spreads for a decent return of about 30% on total risk for a few days of holding. After watching JNJ close up another week (making it 15 consecutive weeks), I saw the opportunity to put the same putspread on for close to the same entry price as the first time. And too my amazement JNJ continued higher, at some point in the middle of this week I closed the put spread for a loss and bought 6 ITM puts @ $85 strike price. My conviction has increased and each consecutive week higher adds another level of confidence with the probability of decline more likely.

JNJ has gained over 21% in the last 16 weeks with no real pullback in least not on a weekly basis. I think the first weekly close can get us down to the $80 price level and that is my first price target. $75 is in the realm of possibilities. With only 27 days to go until my put options expire, I will be looking to roll them if we do not get the move I am expecting this next week. Another weekly closer higher would have consider rolling up and increasing my size to 10 contracts. The higher this stock goes relative to its parabolic formation, the higher reward I see.

Good Luck Trading!!!

In The Money Trades

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