Another plug for JNJ, which I bought yesterday @ $57. (Happily, it's already up >$1.)
I also went and bought 2x Jan08 JNJ LEAPS @ $60, at a cost of $6.10 (-WJNAL).
Basically, I'm betting that JNJ will appreciate at greater than 6.6% per year for the next 2 years. If so, I win big. For instance, if JNJ hits the $76 target mentioned in my previous post, I'd nail a 167% return (vs. 33% for a regular long position (plus dividends.))
However, because LEAPs (and all options) are really just volatility plays, I'm also thinking about using this LEAP purchase to profit from the short term upward run for JNJ that I know if gonna happen sometime this year. If that's the case, I can sell the LEAP for a gain. Already since buying this morning, the JNJ LEAP has appreciated by 5% because of the ~2.5% rise in the price of JNJ.
Five Cheap Companies that Create Value: Financial News - Yahoo! Finance
Wednesday, February 08, 2006
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