The current market is offering an excellent opportunity to buy protection against election uncertainty and the general trend toward decreasing payments for pharmaceutical companies from Medicare and private insurers.  

By December we will know many things that are only fears and undefined abstractions at the moment.  Once we know who the next president of the United States will be, the Medicare and the Obamacare situations will likely get the spotlight that is currently being hogged by Mr. Trump and Mrs. Clinton’s public wrestling match. 

Here is the bottom line about pharmaceutical stocks at the moment: Rising prescription costs for patients, decreasing insurance coverage and medication limits will become fully apparent to the public as their renewed insurance plans go into effect in the October to January time frame. Higher deductibles and premiums are also lurking and will squeeze consumer pocketbooks. If people can’t buy their medications, JNJ and the large pharmaceuticals won’t make as much money. I’m already seeing this in my private practice on a very regular basis.

If I’m right, analysts will start to ratchet down their unrealistic earnings expectations for large pharmaceutical companies as this becomes apparent. The current weakness in JNJ shares suggests that the smart money is starting to ease out of the shares. I will have more in Monday’s BTP weekly.

Buy & Johnson December 16, 2016 115 Put Option (JNJ_121616P115) up to $4.