Johnson and Johnson (JNJ) PriceWatch Alert Support Down To $56.09

Posted: Thursday, July 02, 2009 8:07 AM EDT

Johnson and Johnson (NYSE: JNJ) closed yesterday at $57.07. So far the stock has hit a 52-week low of $46.25 and 52-week high of $72.76. Johnson and Johnson stock has been showing support around 56.09 and resistance in the 57.67 range. Technical indicators for the stock are Bullish and S&P gives JNJ a positive 4 STAR (out of 5) buy rating. JNJ appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at an Oct '09 55 covered call (JNJ JK) for a net debit in the $53.77 area. That is also the break even stock price for this trade. This covered call has a 107 day duration, provides 5.78% downside protection and a 2.29% assigned return rate for a 7.80% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the JNJ Jan '11 40 Call (VJN AH) and selling the Oct '09 55 call (JNJ JK) for a $14.10 debit. The trade has a 107 day life and would provide 5.20% downside protection and a 6.38% assigned return rate for a 22.00% annualized return rate (for comparison purposes only). Johnson and Johnson has a current annual dividend yield of 3.44%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]

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