Sarah Wasserman (swasserman@sir-inc.com) Johnson & Johnson's (JNJ) recall woes continue, as the company's McNeil unit just initiated a recall of Children's Benadryl and Junior Strength Motrin due to manufacturing insufficiencies. So far, the company has recalled roughly 4 million packages of Benadryl and 800,000 bottles of Motrin.
JNJ is down roughly 1.3% so far today, to trade around $62.80. Since September, the shares had been rallying along the support of their 10-week moving average, which had boosted JNJ back near its April highs in the $65 to $66 region. However, due to today's pullback, JNJ is now poised beneath this important trendline.
Put players have been quick to react today, with roughly 15,000 of these bearishly oriented options crossing the tape so far -- double the pharmaceutical issue's expected single-session put volume.
Today's activity has centered on JNJ's December 62.50 put, with roughly 2,700 contracts traded. What's more, the majority of these puts crossed at the ask price, indicating they were likely purchased. However, with open interest exceeding today's volume at this strike, we cannot yet determine whether new contracts are being added here today.
If December 62.50 puts were bought to open, then traders are betting that JNJ will backpedal below the $62.50 level over the next month. Alternatively, put writers could also be buying back their short positions in response to today's pullback.
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