The Johnson & Johnson trade
On Wednesday morning, Benzinga Pro subscribers received an option alert related to an unusually large Johnson & Johnson trade:
- At 10:18 am, a trader bought 1,800 call options from Johnson & Johnson with a strike price of $ 155 that expired in June 2022 at the asking price of $ 9.60. The operation represented a bullish bet of more than $ 1.72 million.
Because it is important
Even stock-only traders often closely monitor option market activity for unusually large trades. Given the relative complexity of the options market, large option traders are generally considered more sophisticated than the average stock trader.
Many of these large option traders are wealthy individuals or institutions that may have unique information or theses related to the underlying stocks.
Unfortunately, stock traders often use the options market to hedge their larger stock positions, and there is no sure way to determine if an options trade is a stand-alone position or a hedge. In this case, given the relatively large size of Johnson & Johnson’s options trade on Wednesday, it certainly could be institutional hedging.
Johnson & Johnson Orientation Update
On Wednesday, the Missouri Court of Appeals reduced Johnson & Johnson damages related to a lawsuit linking the company’s talcum powder to cancer in 22 women from $ 4.69 billion to $ 2.12 billion.
The action did not react much to the decision as Johnson & Johnson still faces significant legal liability in other cases related to talcum powder and the opioid epidemic.
Johnson & Johnson also provided a general guidance update this week in a conference call with BofA Securities analyst Bob Hopkins.
In the call, CFO Joe Wolk said Johnson & Johnson’s medical device sales are down nearly 50% in April and May. The company is confident that it will outpace the growth of its peers in its consumer and pharmaceutical businesses by 2020.
Wolk also said the company plans to appeal this week’s Missouri ruling to the state Supreme Court. Johnson & Johnson also said it is potentially anticipating an opioid fix by the end of the year.
Finally, management said it hopes to begin testing a possible COVID-19 vaccine in human subjects by the end of July.
JNJ chart by New TradingView TradingView.widget ({“width”: 680, “height”: 423, “symbol”: “NYSE: JNJ”, “interval”: “D”, “time zone”: “Etc / UTC” , “theme”: “light”, “style”: “1”, “locale”: “en”, “toolbar_bg”: “# f1f3f6”, “enable_publishing”: false, “allow_symbol_change”: true, “container_id”: “tradingview_8a4e6”}); The taking of Benzinga
Wednesday’s big options trader may be betting that Johnson & Johnson will finally win the race to bring a coronavirus vaccine to market, or it may simply be betting that concerns about talcum powder and opioid litigation are overblown. .
June 2022 calls have an equilibrium price of $ 164.60, suggesting a rise of at least 17.4% from current levels.
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