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  • Writer's picturethemoneyloaf

$32 profit in JNJ

Happy Sunday!

This week:

  1. $32 profit in Johnson & Johnson (JNJ)

  2. New trade in Caterpillar (CAT)


$32 profit in JNJ

On 26 Oct, JNJ reported their earnings and the stock dropped soon after.

It showed all the signs of a great trade setup, so I sold a $145 cash-secured put expiring Nov 17 for $62.

6 trading days later, on 3 Nov, I bought back the trade for $30, resulting in a realised profit of $32 (or 52% of max profit)


JNJ has been great for the portfolio with 8 winning trades this year, and a total realised profit of $1,534.

There was also one assignment, which means I had to buy 100 shares of JNJ at $165 per share.

But wait, isn't JNJ trading at $152+ now? Doesn't it mean I bought it at a higher price?

Yes, but don't forget the $1,534 of realised profits also goes towards purchasing the shares at a discount.

So my true cost basis is something like $149.66, and I'm continually reducing my cost basis as I continue to sell options against the position.

This is why I don't buy stocks outright anymore - I only sell options so that I can buy them at a discount.


New trade in CAT

With volatility down (again), there haven't been that many opportunities for the last couple of weeks, so I jumped on this one when it appeared.

I sold the $220 cash-secured put in CAT, expiring on Jan 19 for $187. This is actually my first CAT trade this year, for no reason other than other stocks have just shown better opportunities.

Just 2 days later, it's currently trading at $125 for an unrealised profit of $62 - as shown in my screenshot, I'm going to let this run to about $90 before buying it back.


If you'd like to receive my trade updates (not recommendations) in real time, you can sign up for my Bread Crumb subscription via the link below.


Closing thoughts & useful links

The market has well and truly shrugged off the “correction” from not even a month ago, which is a little surprising, given all that's going on in the world.

Again, this is why it's important to stay invested in the market - and selling options provides that perfect opportunity to generate cashflow, but also buy stocks at a discount, as seen in the example with JNJ above.


This article is for educational purposes only. This is my own portfolio which is being managed according to my goals and risk tolerance. Your situation is likely different and you should do your own due diligence before investing in stocks or options.

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