By Jud Pyle, CFA, chief investment strategist for the Options News Network

Looking at the July 30 strike puts in

Johnson & Johnson

(JNJ) - Get Report

, we find that they have traded more than 14,000 times so far Monday vs. current open interest of 0, for an average price of around 35 cents.

What is interesting about this put activity is that most of the activity is from buyers of the options, and that the strike price of these puts is more than 35% below the current stock price.

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In order for these puts to be profitable at expiration, the stock needs to be lower than $29.65, which is the strike of the put, minus the premium that was paid. Shares of JNJ have not been below $30 since back in the fall of 1997. But given that the

Dow Industrials

are at levels not seen since 1997, the audacity of that statement is not so far fetched.

However, the thought of JNJ dipping another 35% from current levels is emblematic of how even the traditional "safe haven" stocks have not held up in this market. The idea of a safe haven is that some companies have businesses that are fairly recession resistant. Medical and pharmaceutical companies typically fit that bill. Yet year to date, JNJ is down more than 20%.

However, the real story is that more than half of that decline, or more than $6 of it, has come in the last three trading days since the Obama budget was announced. The concern in the market is that the nationalization of the health system will result in ever-shrinking margins for health care companies.

Put-option activity like this does not mean that investors should run out and sell their shares of JNJ. After all, this could be an investor buying the puts and buying stock on a ratio. The puts provide disaster insurance, but the real view is that the stock could rip back to its old level.

However, it is worth noting this activity because of how it reminds us of just how different things are in this market and that nothing is out of the realm of possibility when it comes to downside stock moves.

Jud Pyle is the chief investment strategist for Options News Network ( and the portfolio manager of Options Alerts. Click here for a free trial for Options Alerts. Mr. Pyle writes regularly about options investing for

Jud Pyle, CFA, is the chief investment strategist for Options News Network. Pyle started his career in finance in 1994 as a derivative analyst with SBC Warburg. After four years with Warburg, Pyle joined PEAK6 Investments, L.P., in 1998 as an equity options trader and as chief risk officer. A native of Minneapolis, Pyle received his bachelor's degree in economics and history from Colgate University in 1994. As a trader, Pyle traded on average more than 5,000 contracts per day, and over 1.2 million contracts per year. He also built the stock group for all PEAK6 Investments, L.P. hedging, which currently trades on average over 5 million shares per day, and over 1 billion shares per year. Further, from 2004-06, he managed the trading and risk management for PEAK6 Investments L.P.'s lead market-maker operation on the former PCX exchange, which traded more than 10,000 contracts per day. Pyle is the "Mad About Options" resident expert. He is also a regular contributor to "Options Physics."