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

Looking 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.

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.

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