Some quick comments for all investors on Johnson and Johnson Stock (JNJ).
The news of one lot of their famed Johnson’s Baby Powder being recalled for trace amounts of asbestos contamination has the stock down almost 4% today.
I have only one position in the stock which is a debit put spread. Aside from this position I think after denying for 40 years that their product contained any asbestos, this could lead to further damages.
A break down to the December 2018 lows would not be out of the question depending on how much further negative news comes out of this ongoing issue. A drop below $130 is a strong possibility based on the chart for the past 12 months.
You can see in the chart below which is as of Thursday Oct 17 close, $120 is long-term support. The December (2018) low of $123 and the Jun (2018) low of $121 have the potential to be reached especially if further talk on legal issues begins again. The last two asbestos “news” sent the stock considerably lower. Long-term support at $12 however should hold up. For long-term investors, selling put options out to January 2020 at or below $120 is probably a decent way to get into the stock. If the stock does not fall that far, at least an investor will end with a profit.
For January 2020 expiry, the $120 put strike is at $1.70 this morning (Oct 18 2019) and the $115 put strike is at $1.13.
Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk.
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