1. JNJ reported earnings this morning. Price dropped.
BOSTON (MarketWatch) -- Johnson & Johnson early Tuesday reported moderately higher third-quarter earnings, but its sales performance was tempered by declining sales of two of its top-selling prescription drugs, Topamax and Risperdal, due to increased generic competition.
The healthcare products conglomerate posted net income of $3.35 billion, or $1.20 a share, compared with $3.31 billion, or $1.17 a share, for the same period in 2008. Sales for the quarter slipped 5.3% to $15.08 billion, down from $15.92 billion.
J&J's (JNJ 60.87, -1.66, -2.66%) bottom-line was helped by lower expenses across the board and a favorable tax rate. The number of outstanding shares for the quarter was also reduced, to 2.79 billion from 2.83 billion.
According to a recent poll of analysts by FactSet Research, J&J was seen as posting earnings per share of $1.13, with revenue of $15.19 billion.
Investors appeared to be disappointed with the report, pushing shares of the world's largest healthcare company down almost 3% to $60.81 in mid-morning trading.
J&J also raised its 2009 adjusted earnings outlook to the range of $4.54 to $4.59 a share.
2. Expectation: JNJ will move sideway in the near future, with slightly bearish trend.
3. Put Calendar
BTO April 2010 60 Put at 3.05
STO Nov 2009 60 Put at 1.0
Debit => 2.05
BE: 57.62 and 62.22
PE: 20% ROI
SE: very bullish – roll the short put up/out
Very bearish – roll the short put down/out
Posts
Joseph,
ReplyDeleteI am not very good with calendar trade.
Nevertheless, below are my some of my thoughts:
- I think it is a good trade. After a gap down, trade should move down.
- For JNJ, it is moving between 60 and 62.5 for a few months.
- There is a high probability that the trade will go down and stop at 60. Thus, put calendar looks like a very good trade.
- This trade has a 50% reward for about 4 weeks trade for a high probability that it will settle at 60 in November.
Take some contracts off at 2.30. 12% return
ReplyDelete