New Trade : JNJ

Stock / Symbol: Johnson & Johnson / JNJ
Price at trade post: $65.35
Option Strategy: [private_monthly] butterfly call spread + protective call[/private_monthly]

Reasoning:[private_monthly] We're going back to JNJ, which does not historically have drastic moves, making it an ideal calendar or butterfly spread candidate. This particular trade is counting on a slight pullback to $65, but has some protection should JNJ move higher than $66. We expect to be out of the butterfly portion of the trade on or before Feb 17 and then to convert the long Jul12 65 call into a calendar call spread.[/private_monthly]

Trade Details : [private_monthly]

BTO 2 JNJ Feb12 62.5 Calls
STO -4 JNJ Feb12 65 Calls
BTO 2 JNJ Feb12 67.5 Calls
for a net debit of $1.65 per contract (day order, limit order)
BTO 1 JNJ Jul12 65 call
for a debit of $2.16 per contract (day order, limit order)

Cost/Proceeds: $546
Option Requirement: $0
Total Requirements: $546
Estimated Commission: $25.90

Max Risk: $546
Profit Range: $64.42 – 66.00 (Feb 17)
Max Profit: $125 or 23% @ $65 by Feb 17
Suggested Downside Stop: @ $63.95


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