Contrarian long JNJ call: after a 5% post-earnings drop below 250, a bounce toward 250, 260 and 270 is expected. Flow is call-heavy, but IV rank, though down from 80 to 90 to about 62, is still not cheap and needs a larger move; the January 15, 2027 260 call gives a cheaper entry.

we decided to pass on Johnson & Johnson because the puts were too expensive. Johnson & Johnson posted their earnings and the market is falling. That is okay.

My primary is a contrarian desk and that's is how I'm going to play it Johnson & Johnson today. I'm going to revisit that same setup and see if we can flip the script and do some TA and um find it for a call today. See if that environment is fit.

This is Johnson & Johnson. As we see here, we have gapped down today, try to push up a little bit, and then we're still going down under that 250 level.

So, now as a contrarian, I'm looking for, okay, when is this play going to get a bounce?

What this means to me is that this trend line should be strong still. It's had time to re-fortify and is still uh and should give a bounce to the upside. All kind of these three factors in this $2 zone in Johnson & Johnson's nearby right there, right now sitting at 247.10.

if I wanted to express my thesis in an options language, I would buy a call here. We need to see 250, 260, and 270. Those are kind of going to be the main resistance levels as we push back up. 250, this low pivot right here that we just broke below. 260, price action, the low where we gap down from yesterday's close, and 270, a really strong push up to the upside past this pivot top here.

please note that 250, 260, 270, those are going to be the targets and that I'm going to be looking for on the chain to see if we can fit a better trade today.

Looking for a call for this on the Johnson & Johnson. And I love that we're literally flipping the script on this from the last time we looked at it.

We passed on Johnson & Johnson um in the second episode because the IV was was too high. It was coming in at 80 or 90.

we're a we're a call buyer right now in Johnson & Johnson. If we're buying that IV rank, which is at 80 to 90, we need a larger move from Johnson & Johnson to overcome that uncertainty.

say we get that call on Johnson & Johnson, and just out of nowhere, this is a This is a makeup. Johnson & Johnson just came up with a new um a new formula for a for um for some weight loss thing, and then that uncertain The market saw this and like They're like, "Whoa."

So even if the stock did not move, that fear expansion is going to benefit the buyer.

I'm looking up here at the top left. I'm looking at Johnson & Johnson. We're going to go to the options here, and this is IBKR. This is the platform that I use.

right now, Johnson & Johnson's at 246. So, 245 and 247 So, 245 around that we're about at the money.

Yeah, and that's at about 0.09, and that's That's the highest decimal. It's that highest point there cuz then Cuz it's at the money. The Vega, it's Yes, it's at the money, and the further we're away from that part, whether more into the money or more out of the Yeah, they're much lower. They're 0.03.

lower. The Vega is much lower because they're more deeper in the money and out of the money. Oh, wow. It's much higher. We're off the 240. Now it's up .4.

Ooh, more. .6. It keeps going up as we go further out. As we said guys, as we further get further from expiration, that is when that Vega or uncertainty will be higher.

Uh at this point guys, let's see if we can figure out a trade setup for Johnson and Johnson. So we have that call. We we have a bullish thesis. Right now um we're fighting we're going with the trend as put call volume is coming in today a strong .36 a strong bullish lean.

IV rank is still kind of elevated. It's not cheap in a perfect environment, but it's definitely come in. Today it's coming in at 63. So when we were looking at this a couple of weeks ago it was at 80 to 90.

So it's definitely come in quite a bit. little cheaper now, but still not cheap.

Yeah, it's kind of right in the middle of the pack. So now with that I'm looking at the Johnson and Johnson um call here at And Tabby, what were kind of my targets to the upside? 250?

Yeah, 250, 260, 270. Um Okay. So now with this if I'm looking at the January 15th expiration this gives us 94 days for our thesis to play out should we kind of continue to flush lower.

Now with that we can get the 260 excuse me, we can get the 260 strike.

Um, but yes, I'm looking at the two 60 strike here. 250, this one's coming at at 11:15, 11:70. That's kind of too much for me.

I really like this 260 though, because this contract's only 730. And our delta Our delta's amazing. It's It's close. It was coming in at about point about point four a little bit ago, but Johnson & Johnson is just starting to slide a little bit, putting in a little more pressure out of the money.

Um, I still like this 260 though. Um, our delta is pretty close, but with that we get a cheaper entry because we waited for that earnings print to happen.

We're coming in at a cheap at a as we're going with the trend, not against it. So, yeah, this is the order that I'm going to get today. Um, I like a call on Johnson & Johnson at this 260 strike, much cheaper entry today.

Uh, if we do get a slight bounce, um, our delta's a little under our threshold where we want it to be, um, but the setup is too good here.

And that's kind of the edge we get, um, as technicians is you can kind of go slightly out of the money with your setup. Um, but now we get to end at a cheaper price. So, that is the play for today, guys.

So, this is a yes for us on this long on this call for Johnson & Johnson today that the expiration is January 15th, 2027 with a 260 call, and the post earnings wash out is JNJ was down 5% post earnings, and that bounce zone was a contrarian bounce into the 244 246 zone that put call volume is at 0.36 which is call heavy is bullish which is in our favor cuz we want that call.

And then let's see we've also got our IV rank is at 62 which isn't super expensive. It's kind of in the middle there. Um and our risk our max loss is the premium paid which I think it was about seven bucks I believe which is nice

But our execution the spread was about yeah the $8 work the order and we're not going to chase. So why yes washed out post earnings move options flow leans bullish and there's a defined risk with the buyers edge.