By Jud Pyle, CFA, chief investment strategist for the Options News NetworkLooking at the July 30 strike puts in Johnson & Johnson ( JNJ), 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.
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 (www.ONN.tv) and the portfolio manager of TheStreet.com Options Alerts. Click here for a free trial for Options Alerts. Mr. Pyle writes regularly about options investing for TheStreet.com.