While waiting on the Fed speech I have entered a few trades. The first one I want to discuss is Johnson and Johnson Stock. A lot of investors tend to chase speculative stocks or juniors as they tend to have higher option prices. This may seem like a great idea at the time, but those higher option prices are there for a reason – risk. Risk is measured in the option prices you see. I have many friends who trade within Junior stocks and while they do not buy or sell options, they use those option prices to determine the risk to their capital in a junior stock. Higher option prices they know will mean more risk to their capital.
This is why I stay with the large caps that I prefer. Johnson and Johnson Stock is one of those great companies that is heavily owned by institutions and pension funds not just in the USA but around the world. The strength of this company means that in any kind of large sell-off the stock is worth buying.
Today though, one of the trades I am trying to enter will return 9% for a month of what I consider not much risk to my capital invested.
This trade alert is for FullyInformed USA Members.