Trade Recap – JNJ Long Put Butterfly

Stock / Symbol: Johnson & Johnson / JNJ
Strategy: Long Put Butterfly
Trade entry date / price: 28Aug 2020 / $152.79
Trade exit date / price: 04Sep2020 / $148.59

Recap: This trade was reminder of the adage that your price target will often hit, just not when you want it to. We hit our target of $152.50 the prior Wednesday (Sep 2nd), it's just that the trade profit at the time was minuscule. I still think it was a good premise (that JNJ would trade flat for the week)... I just didn't account for a huge market sell-off. That's why we always limit our risk!

Position:

Long 1 JNJ 4Sep20 155 put
Short 2 JNJ 4Sep20 152.5 puts
Long 1 JNJ 4Sep20 150 put

Opened at a net debit of $0.68 per contract. Unsold at expiration.

Analysis:

Max Risk: $72
Actual Risk: $68
Max Reward: $145 or 200% with JNJ at $152.50 on Sep 4th
Profit Range: JNJ between $150.80 and $154.25 on Aug 28th
Commission (round trip): $6
Take profits @ $152.50
Realized Profit / Loss upon fill: ($68) or -100% (pre commission)

Positive Theta

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