Opportunity exists everyday for those willing to act.

A fact I hope you will continue to understand, appreciate and utilize... put selling reduces your equity investment risk.

Put selling is easy. You find a company that you like. You identify a price you are willing to buy. Then you collect premium upfront for agreeing to buy shares at your stated price. It is like collecting interest in the bank while you wait for the market to come to you. Except the returns are substantially better.

Today's example is consumer goods giant Johnson & Johnson (JNJ). The company essentially runs over 250 businesses across the global. They control some of the best brands in the world and ones you are likely to use everyday including Band-Aid, Neutrogena, Clean & Clear, Listerine, Tylenol, Sudafed, Benadryl, Splenda, Visine, Acuvue, and Aveeno.

As large as JNJ is that company is still able to grow regularly while maintaining attractive 20% profit margins. The company also treats shareholders very well by raising dividends for the past 56 years currently paying 2.6%.

Now is a great time to own the stock with an EV/EBITDA ratio of 15.3. The premium to average S&P500 company is justified by its faster and consistent growth, large profit margins, and higher dividend yield.

Chart is looking good with shares trading in an uptrend above the 50 and 200 day moving averages.

Trade details:

Sell the December 21, $140 puts on J&J for about $3.25 using a limit order. Earn an instant 2.3% return for agreeing to buy shares at $140.

At expiration if shares are above $140: put sellers will keep the $3.25 for a 17% annualized return.

At expiration if shares are below $140: put sellers will get to buy shares at a 2.9% discount to yesterday's closing price including put selling premium. You will own a great company, have the chance to start collecting the 2.6% dividend and could look at generating more income by selling covered call options.

For protection use a stop loss at $127. Shares will have fallen below their 50- and 200-DMAs and it is best to take a small loss and move on to other opportunities.

Create a second income today buy using options to your advantage.

Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article.