Guru investor Warren Buffett has added shares of Johnson & Johnson (NYSE: JNJ) to his portfolio in 2007 despite the stock's lackluster performance so far this year, perhaps taking advantage of what he believes is but a temporary lull in the stock's price. Buffett is well known for his remarkable success at picking value stocks with outstanding growth over time. Investors who want to follow Buffett's example may want to look at today's dip as a buying opportunity. Plus JNJ could be a good defensive buy heading into Tuesday's Fed announcement. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on JNJ.

After hitting a one-year high of $69.41 in October, the stock has been weak over the past year, setting a 52-week low of $59.72 in late July. JNJ opened this morning at $62.91. So far today the stock has hit a low of $62.87 and a high of $63.11. As of 11:15, JNJ is trading at $62.92, down $0.19 (-0.3%). The chart for JNJ looks neutral and improving, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $55 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make a 4.2% return in just 4 months as long as JNJ is above $55 at January expiration. Johnson and Johnson would have to fall by more than 12% before we would start to lose money.

JNJ hasn't been below $55 since 2004 and has shown support around $60 recently. This trade could be risky if the company's earnings (due out 10/16) disappoint, but even if that happens, this position could be protected by the strong support the stock formed at $60 where the stock bounced twice over the past six months.

Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: At publication time, Brent neither owns nor controls positions in JNJ.