On Friday’s Options Action, the crew analyzed the performance of Johnson & Johnson (JNJ) stock. JNJ has underperformed the S&P 500 over the past year but recently has started to catchup along with Consumer Staples. JNJ is trading at extreme negative levels compared as a spread to both the S&P and its 150D SMA, suggesting outperfomance going forward. Coupled with an inverted head & shoulder formation and break above a bearish trendline, JNJ is likely to turn bullish. Expecting JNJ to trade higher, Michael Khouw suggests buying a Sept 125/135 Call Vertical for a $2.60 Debit. As of Friday’s close, this option is trading at $2.42.
We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience. You can also view the Options Action’s video by clicking on the following link: JNJ Options Action