Stock / Symbol: [private_monthly]Johnson & Johnson / JNJ[/private_monthly]
Price at trade post: $65.60
Option Strategy: broken wing butterfly
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, and bets that it stay's over $64 by Jan 20. In case JNJ continues higher, beyond $67 by Jan exp, the upside loss is relatively small.[/private_monthly]
Trade Details : [private_monthly]
BTO 4 JNJ Jan12 62.5 Calls
STO -6 JNJ Jan12 65 Calls
BTO 2 JNJ Jan12 67.5 Calls
for a net debit of $3.08 per contract (GTC, limit order)
[/private_monthly]
Requirements
Cost/Proceeds: $616
Option Requirement: $0
Total Requirements: $616
Estimated Commission: $15.00
Max Risk: $616
Profit Range: $64.05 – 66.90 (Jan exp)
Max Profit: $350 or 56% @ $65 by Jan exp
Suggested Downside Stop: @ $64
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